"It's The Economy, Stupid" U.S. Economy Megathread

[Ann 358]

20 hours ago, Chris said:

At my worst, my credit card balance ( just me ) has only been $3,000, which is the limit and I won't raise it any higher. As a family, I'm very sure we don't have a total high balance at all. The wife is pretty diligent about that kind of thing. In the past I haven't worried too much about being on the higher end of my limit, but lately I have been paying better attention to how I use credit. Of course Christmas will come along and then things change, but we pay it down or off as fast as we can after. 

Maybe this year we can try to pay cash more, but with doing most of my shopping on Amazon, it may not work too well. 

Use Amazon and still pay cash, just buy Amazon gift cards.

Edited August 10, 2023 by Ann
spelling correction

[MsKreed 1,435]

1 hour ago, Chris said:

Am I the only one who thinks the AP is doing all they can to not use the word "unemployment" here?

Maybe the psychology is that, by throwing in the word “benefits” it sounds less negative? "Hey look! There's benefits to being jobless!"

Either way, the “unemployment” rate has been misleading for decades. It only counts people during the period they’re eligible to collect UI benefits.

The “unemployment” numbers (jobless benefits) we see reported omit all the people (including homeless) who are quietly listed elsewhere as simply “not participating” in the labor force, rather than “unemployed”.

 

People who haven’t worked steady enough (2 consecutive quarters) to qualify for UI.....aren’t listed as “unemployed”.

People who worked independently (self employed, gig work etc and don't qualify for UI).....aren’t listed as “unemployed”.

People whose UI expired (after 26 weeks) and still haven’t found work.....aren’t listed as “unemployed”.

[Chris 2,774]

I saw somewhere that in order to live the same lifestyle you did in 2021, you’d now need $15,000 more dollars a year.

At first that seemed crazy, but looking at inflation but also “shrinkflation” that’s happening at the same time I’m inclined to believe it.

[MsKreed 1,435]

12 hours ago, Chris said:

I saw somewhere that in order to live the same lifestyle you did in 2021, you’d now need $15,000 more dollars a year.

At first that seemed crazy, but looking at inflation but also “shrinkflation” that’s happening at the same time I’m inclined to believe it.

The cost of the 'Home Alone' grocery trip has nearly doubled in the past year. And we had a spike of higher inflation the year before. 

When you add household bills, gas, clothes and everything else.....I have no doubt that the total for all the goods/services for a household is up $300/week ($15k/yr). 

 

Quote

Items including a half gallon of milk, a half gallon of orange juice, a TV dinner, bread, frozen mac and cheese, laundry detergent, cling wrap, toilet paper, a pack of army men and dryer sheets cost the character, played by Macaulay Culkin, $19.83.

Last year, the same grocery list cost $44.40, and this year, it costs a whopping $72.28 in 2023.

 Source

There seem to be a few competing price estimates, but many of them relied on "generic" brands at Walmart or Aldi to trim this years price down to around $50 to $60. 

While that is, in fact, how many consumers are managing to get by these days, the actual comparison is the kid buying name brand items at a local grocery store in his neighborhood. If he'd had purchased the suggested generic alternatives in 1990, it would have been a lot less then. 

Edited December 10, 2023 by MsKreed

[Chris 2,774]

Quote

 

January's stubbornly high inflation rate was "boosted by a notable uptick in food inflation back to 0.4%," noted Greg Wilensky, head of U.S. fixed income at Janus Henderson Investors, in a Tuesday email, adding, "We have not seen a food inflation print this high since the beginning of last year."

The reason for inflation's stubborn hold on food prices can be linked to a number of issues, from higher labor costs at manufacturers that trickle down to consumers, to record-low cattle numbers that are driving up the cost of beef and steak. 

But some policy experts see other issues at work: Corporations, they claim, are increasing prices simply because they can. President Joe Biden last month warned that companies are "ripping people off" with a combination of price gouging, "greedflation" and shrinkflation. 

Greedflation refers to when companies hike product prices beyond the rate of inflation in order to juice their profits — a concept that Northeastern University economist William Dickens notes has become politicized, with Democrats typically leaning into the idea. Republicans, meanwhile, tend to blame the Biden administration for higher prices. 

What's causing higher food prices

In fact, five types of food have been responsible for 30% of grocery inflation in recent years, the left-leaning think tank Groundwork Collective found in a February report.  They are beef and veal; poultry; non-frozen, non-carbonated juices and drinks; fresh fruits and vegetables; and snacks. 

A few of those categories were among the drivers of January's hike in food prices, with beef and veal jumping 7.7% last month. Frozen non-carbonated drinks like orange juice surged 29% last month on an annual basis, while non-frozen non-carbonated drinks rose 4.2%, the CPI data shows. 

The reason for the hikes may be due to supply issues and climate change, rather than corporate greed. Drought has reduced pasture for raising cows, leading to smaller cattle herds, according to the U.S. Department of Agriculture. And orange production has been impacted by severe weather events and the citrus greening disease, which doesn't have a cure.

 

Read more here.

I heard on NPR a week or two ago that food prices are not included when figuring the rate if inflation, which to me was a shocker. Anyone who's hit the grocery stores lately can tell you that prices are indeed going up, while the overall size or amount you get for the higher price is less. Inflation and shrinkflation all in one. 

Yesterday at Tops I took a glance at eggs, because someone who just started buying from me was surprised at what I charge. ( Or the equivalent, because I trade for beer chips LOL ) They were over 3.00:

So yeah, I'm "selling" them at a loss of at LEAST a buck, and likely more because it costs me more per dozen than a mass production facility, no doubt. I should be charging closer 4.00-5.00, but I'd never sell any at that price. 

Anyhow, the cost of everything is going up, most notably food. I don't know how anyone can say the economy is doing better with a straight face.

[Ann 358]

Also, once prices go up they never go back down.  The economy is definitely not doing better.

[Twin Tiers Living 428]

Quote

 

WASHINGTON (AP) — Many Americans are in a sour mood about the economy for one main reason: Prices feel too high. 

Maybe they’re not rising as fast as they had been, but average prices are still painfully above where they were three years ago. And they’re mostly heading higher still.

Consider a 2-liter bottle of soda: In February 2021, before inflation began heating up, it cost an average of $1.67 in supermarkets across America. Three years later? That bottle is going for $2.25 — a 35% increase.

Or egg prices. They soared in 2022, then fell back down. Yet they’re still 43% higher than they were three years ago.

Likewise, the average used-car price: It rocketed from roughly $23,000 in February 2021 to $31,000 in April 2022. By last month, the average was down to $26,752. But that’s still up 16% from February 2021.

Wouldn’t it be great if prices actually fell — what economists call deflation? Who wouldn’t want to fire up a time machine and return to the days before the economy rocketed out of the pandemic recession and sent prices soaring?

Many economists caution, though, that consumers should be careful what they wish for. Falling prices across the economy would actually be an unhealthy sign.

 

Read more here. 

[MsKreed 1,435]

Quote

“Although lower prices may seem like a good thing,’’ Banco de España, the Spanish central bank, says on its website, “deflation can in fact be highly damaging to the economy.’’

How so? Mainly because falling prices tend to discourage consumers from spending. Why buy now, after all, if you can purchase what you want — cars, furniture, appliances, vacations — at a lower price later?

Wow. Are there consumers who really believe this line of BS?

Not only do falling prices not discourage consumers....there is a direct correlation that lower prices lead to increased purchases. 

From cars to electronics.....consumers buy more as prices fall. Things that used to be "luxuries" only found in a few households that became commonplace for every family to own more than one.

DVD players, cell phones, TVs – you name it. Remember when a PC cost $5-6k and only a few geeks bought them?  

 

Quote

When the Ford Model T was introduced in 1908, it cost about $950 (nominal dollars), with only 10,000 units produced. By 1924, 2 million units were produced at the cost of $300 each

And here's what the result looked like:

Source

Edited April 1 by MsKreed

[MsKreed 1,435]

[Chris 2,774]

4 minutes ago, MsKreed said:

Wow. Are there consumers who really believe this line of BS?

You gotta love it. 

"Hey we realize that you get less groceries with $100 now than a couple years ago, but it's even worse if the prices go down and you can buy more. Trust us!"

[Chris 2,774]

Sad but true:

[Twin Tiers Living 428]

Quote

 

WASHINGTON (AP) — A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed’s reluctance to cut interest rates anytime soon and underscoring a burden for President Joe Biden’s re-election bid. 

Friday’s report from the government showed that prices rose 0.3% from February to March, the same as in the previous month. It was the third straight month that the index has run at a pace faster than is consistent with the Fed’s 2% inflation target. Measured from a year earlier, prices were up 2.7% in March, up from a 2.5% annual rise in February.

 

Source

[Chris 2,774]

 

[Adam 458]

Well Joe, wouldn't be bouncing checks or making late payments if we weren't paying ridiculous prices for EVERYTHING!

and yes there IS corporate greed but i trust you and congress are working on that much like yall have been "working on" crime, illegal immigration, war on drugs, prescription medicines, Social Security......

[Chris 2,774]

“They have the money to spend,” is the new “Let them eat cake.”

[MsKreed 1,435]

12 hours ago, Adam said:

Well Joe, wouldn't be bouncing checks or making late payments if we weren't paying ridiculous prices for EVERYTHING!

This.....exactly this!!!

He thinks "fixing" the cost of late fees is a solution, without comprehending the reason consumers are unable to make payments on time???  People do not have as much money as they have in the past (even those taking an extra job). The cost of living has risen higher and faster than income. 

Yes, some corporations are making profits. If he really believes that's a problem......then he should tell people to stop celebrating how great the stock market is doing; how awesome it is if the Dow reached 40,000; and giving him credit for facilitating all that 'greed'. 

But honestly....many corporations aren't doing so great. Most notably, people are not spending money on discretionary (non essential) consumer products.

There are layoffs and store closings for places like Red Lobster, movie theaters, Ulta Beauty, GameStop.....people don't "have the money to spend" on that stuff because they're spending too much on gas, groceries and home utilities.

Edited May 10 by MsKreed

[Chris 2,774]

39 minutes ago, MsKreed said:

how great the stock market is doing; how awesome it is if the Dow reached 40,000;

I've never really viewed the stock market as a solid indicator of how the economy is going. That's only good for people who have the time and money to manipulate , uh, invest in it.

[MsKreed 1,435]

26 minutes ago, Chris said:

I've never really viewed the stock market as a solid indicator of how the economy is going.

It’s not a solid “direct correlation” indicator to the economy, because it encompasses everything......from necessities to luxuries. So “up” can reflect inflation, high interest rates and high cost of living (especially if necessities like fuel and staples are up). While “up” for luxury discretionary products and services can reflect extra consumer cash flow.

26 minutes ago, Chris said:

That's only good for people who have the time and money to manipulate , uh, invest in it.

This is only true to an extent.  Most 401k, pensions, college and retirement funds depend on stock investments, either directly or indirectly.

So, even if Sue and Johnny Average don’t have a visible “investment portfolio” that they actively control.....whatever they have for a nest egg likely is strongly dependent on stock investments.

Edited May 10 by MsKreed

[Chris 2,774]

20 minutes ago, MsKreed said:

This is only true to an extent.  Most 401k, pensions, college and retirement funds depend on stock investments, either directly or indirectly.

So, even if Sue and Johnny Average don’t have a visible “investment portfolio” that they actively control.....whatever they have for a nest egg likely is strongly dependent on stock investments.

You're right of course, I forgot all about that.

[MsKreed 1,435]

Quote

Here is a view of grocery prices in a chart from the Bureau of Labor Statistics, with data from the St. Louis Federal Reserve, from the beginning of Trump’s White House tenure until the present. In the zone I have highlighted, from mid-2021 to mid-2023, grocery prices vaulted higher and have stayed at those elevated levels, even if the rate of ascent has slowed.

That part I bolded is doubly frustrating for most consumers (myself included) who are: 

"A" Scrambling to make cuts wherever we can identify "non necessities" that we can do without (and therefore enjoying fewer "fun/pleasure" extras). ;

and, "B" Insulted and annoyed when 'experts' try to convince us that since prices for basics aren't skyrocketing as fast as they were last year.....rather than being upset (that our savings are shot, credit debt is untenable, and we're eating ramen at home instead of an occasional dinner out) we should be celebrating how great things are!

 

Quote

There is an important lesson here. Far too many so-called experts have tried to condescend to the American people, and lecture them that they are somehow actually doing well economically – that they’re just too dense to understand their own kitchen table reality.

But regular citizens are not dumb, and they are not wrong about key aspects of their lives becoming unaffordable. As Christopher Jacobs of Juniper Research explained well in an analysis of grocery prices for The Federalist: “Whether ordinary citizens know the specifics of whether grocery prices have gone up by 10 percent, 110 percent, or 1,000 percent, they recognize that prices have gone up by more than they can afford.”

Source

[Adam 458]

2 hours ago, MsKreed said:

That part I bolded is doubly frustrating for most consumers (myself included) who are: 

"A" Scrambling to make cuts wherever we can identify "non necessities" that we can do without (and therefore enjoying fewer "fun/pleasure" extras). ;

and, "B" Insulted and annoyed when 'experts' try to convince us that since prices for basics aren't skyrocketing as fast as they were last year.....rather than being upset (that our savings are shot, credit debt is untenable, and we're eating ramen at home instead of an occasional dinner out) we should be celebrating how great things are!

“Comrades!” he cried. “You do not imagine, I hope, that we pigs are doing this in a spirit of selfishness and privilege? Many of us actually dislike milk and apples. I dislike them myself. Our sole object in taking these things is to preserve our health. Milk and apples (this has been proved by Science, comrades) contain substances absolutely necessary to the well-being of a pig. We pigs are brainworkers. The whole management and organisation of this farm depend on us.”

[Chris 2,774]

I do the majority of shopping for our family these days and can tell you first hand that inflation and shrinkflation continue despite all the rosy outlook this administration tries to make us believe.

We’re not feeling the crunch as much as many others are, but I still buy off brand in order to try and save a little money because of the price increases, and on principle.

I’ve also been buying the meats that are marked down because they’re approaching the expiration date. It’s going in the freezer anyway, so it doesn’t matter, and it’s a significant savings.

But I get pretty ticked off when I hear how “better” things are, because it’s complete B.S.

[Ann 358]

It’s just the two of us in our household.  We buy our beef from a local farmer but, like you, when rarely buying pork or chicken, look for the reduced meats.  I don’t think the buy one get one free are good buys.  If you keep track of price per pound, they just raise the price per pound.

[Twin Tiers Living 428]

Quote

 

If there’s anything Americans love, it’s cheap meat. So business is booming at Texas Roadhouse and LongHorn Steakhouse, even as Americans pull back elsewhere.

In the quarter ending on March 26, sales at company-owned Texas Roadhouse locations open at least 18 months jumped 8.4% compared to the year before. And in the three months through May 26, sales at Longhorn Steakhouse locations open at least 16 months rose 4%. Longhorn, which is owned by Darden Restaurants, outperformed the other chains in Darden’s portfolio, including Olive Garden.

That’s all happening as Americans curtail retail spending and plan to shell out less for vacations this summer. Most restaurant chains are feeling the heat, with even McDonald’s reporting that lower-income consumers are pulling back.

The two eateries have a history of performing well during periods of economic uncertainty — a few years ago, the pair were standouts as inflation-weary Americans began to pull back on spending.

It may seem counterintuitive for sales at steakhouses to rise when people feel short on cash. But both Texas Roadhouse and Longhorn Steakhouse seem to have done what every restaurant wishes it could: Make people feel like they’re getting a good deal when they need it most.

 

Source

[Chris 2,774]

We actually steer more towards the locally owned establishments now rather than the chains. Maybe the portions aren’t so huge they’re coming out in digested ( to borrow a phrase I saw on iElmira once LOL ) but we never leave hungry, we’ve supported a neighbor or someone we know personally, and there’s a sense of satisfaction that also leaves us feeling sated.

On the flip side of that, local establishments have to be careful with their pricing. Not just in the service industry but retail as well. Let me offer a recent example.

I was in need of some new hedge trimmers. You know, the old fashioned kind you cut by hand with? So I went to a locally owned place. They had one brand in stock for $55. I didn’t need them that bad, so I decided to look elsewhere.

While I bought something different at Valu-Center, a chain store, I did see that same pair of hedge trimmers for like $15 cheaper.

Now I understand well the buying power of a chain vs an independent store, but that markup still seems a little steep to me.

The point being, small, independently owned businesses have to find ways to stay competitive because consumers are looking to save money and will go where the savings are. The above article is just one example.