When was the last time you heard the word “inflation” since the election, except to hear that it’s easing?
And the pundits have been talking recession for almost a year now, while the economy keeps chugging along like the Engine that Could. Even with the stupid tech layoffs, unemployment is low. If the Fed would just stop making egregious rate increases, there’s no reason there should be one. It’s strictly manufactured.
I’m always a little sad to hear of their troubles over the years. I had a relative who lived in DeWitt, I got a tour of the factory when I was a kid. Made an impression that I didn’t ever want to work in a factory. Also impressed me that it doesn’t matter how remote a place is, if a town like DeWitt Nebraska can produce a unique and world famous tool. I received one needle-nosed vise grip plier for a gift around age 19 or so, best most useful tool I’ve ever owned.
As for the layoffs, it sucks for those involved, but I remember the point that when if comes to unemployment, pay attention to statistics and not the news. If all you do is read the news, you’d think no one has any jobs anymore. Thousands laid off makes a lead story, hundreds of companies hiring 10 people each might be the same numbers but doesn’t generate a headline.
I mean I hear it’s easing…
But the same shopping list I used to buy from Fred Meyer every week for the past two years has nearly doubled in price, and it’s still going up pretty significantly. Mind, we eat eggs, so… that doesn’t help, but if it’s not eggs, it’s something else. And I think my weekly shopping list showing like a hockey stick increase says inflation is still a factor in my life.
Google Meet for corp videoconferencing became solid. That’s all I got
If you are one of the largest tech companies in the world, have finally, after dozens of tries, gotten your video conferencing software to the point where it works acceptably, yet the generic term used for a video conference is the name of a much much much much much smaller competitor, have you succeeded? Discuss
Umm, because it is easing? Along with media reporting in general is bad combined with most macro economic stories when not immediately sensational are incredibly boring and nuanced. Which feeds into the reporting in general is bad.
Both the actual rate increases and just as importantly, if not more important, the belief that they’ll keep doing it and not reverse to fast is exactly why inflation is easing. Just the belief that rates will not go back down has almost as much impact as them going up slowly.
Looks like it’s down almost 3% from a monthly peak last June. Still not “low”, just “lower” which is not the same thing.
The macro economic environment is significantly harder to predict or influence in small ways than we tend to think. A recession would be the fastest way to slow inflation. If the fed raised rates even faster, they could have ended inflation faster, but would have certainly created a recession. With supply still recovering from COVID impacts, much harder and slower than disruption took, there’s no way to increase supply. That leaves reducing demand as the only way to slow inflation. The fastest way to reduce demand would be a recession.
The belief that they’ll not lower rates, along with belief that they’ll not slow the increase to fast is probably more important than the actual changes. As long as the actual changes continue to reinforce that belief. This belief is the difference between a soft landing slowing of the economy to reduce demand in sync with current supply. Along with the ability to let it come back as supply eventually catches up. Verses overshooting the slow down and recession. It’s a very fine line.
Nobody is aiming for deflation though. So, the prices we see now are here forever, it’s the new baseline. The old transitory was about the rate of increase not the actual price increases. Whatever increase we’ve seen is mostly permanent. Give or take the few that are extra supply disruptions like bird flu that should ease eventually.
Another big tech cow joins the herd. Stragglers are so cringeworthy.
Those are quite the quotes in the article.
That’s just a poorly executed new product. They dumped money into becoming a content creator and did it badly. Everyone on the outside could see this for months. Anyone who tried to use Spotify for podcast or audio books knows how bad it is at those things. In theory, they could make the application better to match the content spend, but it’s unclear how. They’re just not good at the different use case.
I say this as someone who owns 2 Car Things that we enjoy for our specific use cases.
20 years in tech as a survivor and gamer of the system tell me my post my have been lacking in detail, (a survivors habit) but these layoffs are a pattern I have seen repeatedly.
You seem to be at a crossroads about the lack of meritocracy we work under, I hope you can get through it and still live with yourself. I’ve seen many who can’t whether they want to admit it or not.
It was easing in August…
Not exactly. They coincide, but the threats of price controls by the Biden administration has as much if not more to do with it. The reason why other actions didn’t affect inflation as expected is because it wasn’t inflation in the classic economic definition of it; it was primarily driven by profit-taking by major industries. This is well documented.
I strongly suspect many of the factors that drove the inflation we saw in 2022 were political (as well as opportunistic). The Oil & Gas industry, shipping, real estate, and meat packing industries all hate Democrats to various extents, and those are the sectors of the economy that drove the “inflation.” This was not a demand-driven inflation, so reducing demand won’t solve it.
Same to you and best of luck 
fruits and veggies might come down some. those prices are influenced a lot by gas prices, if gas comes down they will.
but yeah, there’s not enough competition higher in the chain - and plenty of collusion, implicit and explicit i think - for packaged food to come down. even before the big recent jumps, they’ve been rising year by year. ( or the size of items kept shrinking )
15/hr ( and usually less ) was hard enough on hourly workers before the pandemic. housing keeps getting more expensive ( for no reason i can see other than greed ) - food’s more expensive - transportation is more expensive
something’s got to change
Good point. The profit-taking “inflation” of 2022 is primarily the result of cartel actions in heavily consolidated markets. Demand only matters when there is competition within the economy. The industries that were driving the price increases are among the least competitive. That’s what we get after 70-ish years of lax- to non-existent anti-trust enforcement. Today, companies in these non-competitive consolidated markets don’t even need to overtly collude to raise prices, throttle supply, or to take anti-worker actions. They just play follow the leader, straight to the bank.
Beyond drug prices, is there another area where price restrictions were proposed?
My memory, which clearly could be wrong, is that at a macro economic level initial price spikes were caused by supply chain disruptions. That as we came out of the bottom of the COVID slump, where both supply and demand constricted, and began to ramp back up, that demand far outpaced supply. Not because demand was huge, but just returning towards where it was prior, however with supply severely restricted. Mix in a little war to further mess up supply and demand balance. Throw in some industry specific external factors too, like bird flu. More money sloshing around the macro economy than supply can meet and inflation rises.
In that environment, instead of increasing supply, some companies definitely decided to take profits instead. Some used it as cover to increase prices even more and take extra profits. But, the continuing strong demand even as prices went up is what allows the inflation to continue to rise.
In an industry where adding supply is possible and relatively quick, congress but not the fed, can create incentives to spur that supply. In something like gasoline where it’s refinery capacity that’s the restriction, we’re just screwed. For the fed, the best they can do is spur or deter demand. Lower the demand enough, and even profit taking will need to come down, lowering inflation, since there will be nobody left to take profits from.
I’ll buy into opportunistic. A company that sees it’s costs going up 5% but is able to raise it’s prices 10% and still sell through. It’s completely in it’s self interest to raise the price 10% and pocket the difference. At least until someone else can come along and compete against them, or until demand drops and is unwilling to pay that 10% increase anymore. Most of the macro impacts we’re seeing are in industries with very consolidated suppliers, high start up costs, and where the few players have the ability to effectively collude by just coping each others price increase.
Something like my barber, where there’s literally dozens of direct replacements easily used instead. Prices have gone up, from 18 to 20, but not like they’re charging 25 or 30 now. Something that needs 6 months or years and a million dollar factory to compete, new supply isn’t going to save us, at least not quickly.
I’ve even buy higher prices based on government policy changes. If a policy is viewed to create extra cost, no matter what’s real or not.
However, higher prices from a company done as a political response or because they hate Democrats. Just to stick it to the economy because that’s who is currently in office. That feels far fetched.
In any of those causes, it doesn’t really matter though. The fed has a goal to keep inflation steady. Policy says near 2%. They have a secondary goal to keep unemployment low, but it’s secondary to the inflation target. The fed has a very limited number of tools to do this. Making money more expensive to reduce spending and slow demand is what they have. It’s nice that they have tried to balance how that reduction impacts unemployment, a soft landing. But, nobody should ever be surprised, if it doesn’t work or get us all the way there, inflation is goal one and they’re keep making money more expensive until they’ve reduced demand enough to hit the target, recession or not be dammed.
PS: 100% agree with your “consolidated market” post, typed while I was not hitting submit on this post. 
Depending on the market, it could take a dramatic demand reduction to impact them. Assuming that’s even possible, for some products demand is so inelastic, that it’s not a factor for a long time in those markets.
Oil & Gas (where Biden instituted competitive pressure by releasing lots of the strategic reserve, so that went beyond threat to action), shipping, and meat packing.
ETA: I don’t think traditional economic models work much at all in the current situation. Supply and demand just didn’t track during the inflation rise and still don’t now that it’s easing. The Fed is pissing into the wind with it’s interest rate policies and Powell is so stuck in his thinking that he can’t taste that it’s not rain.
As you pointed out, there were global factors contributing to moderate price increases. But those were mild, in the 3-9% range and should have returned somewhat to normal. But in some segments, the increase was astronomical - fuel, shipping, some meats, air travel, and building materials had price increases in the 2-3x range. That’s way outside the range covered by traditional economics. @gatto has it right: it’s just plain greed.
Are those price controls or policy decision to incentivize supply?
There’s a difference.
The oil one is a direct injection of supply. Sucks if you need compete with the government on supplying it. It’s at least only temporary by definition. The reserve isn’t limitless and needs to get refilled.
The shipping one, assuming you mean ocean shipping, looks like it’s trying to speed up turn around, create some transparency, and regulate some market abuses. All ways to increase supply and hence cause lower prices. Not a direct action on the price.
The first google hit for meat packing was “Biden unveils $1B plan to increase meatpacking competition amid high inflation”. If that’s what it really means, that’s another increase supply policy position.
Now, if Biden proposed a law that said gas can only cost $3.98, shipping $2,000 a container, and meat $5 a pound, and now suppliers have to find a way to make that work. That would be some price controls. And a really bad idea likely to cause shortages and reduce supply instead. Creating a black market at higher prices.
During the height of COVID, we pumped a ton of excess cash into the economy. This kept demand high throughout for some things even as others fell through the floor anyway. At the macro level, it was the right thing to do, to prevent catastrophe for those on the losing end. At the micro level, it could have been done better. Dumping money into companies that fired everyone and reduced their ability to supply was a huge bust. We’re paying for that now.
There’s definitely greed going on with companies using inflation as cover to increase prices more. The demand side is why they’re getting away with it. The single inflation number also hides all that complexity in different sectors, some will be higher some lower. Same for the demand number, some are more elastic than others.
For instance, if you want to drive the price of gas down through demand reduction there’s only 2 options. First, find another fuel and replace it at scale. This is in process, but it’s going to take a long long time to be done. It’s one of the reasons nobody wants to build a new gas refinery. By the time it would pay off in 20 years, gas consumption will be severely reduced. Second, just reduce use. COV ID did that and gas prices fell through the floor as nobody was driving. It was kind of extreme.
The feds rate increases are the hammer of demand reduction. No nuance at all to it, just make money so expensive that companies stop capital spending. Just like a hammer, it’s not subtle. And just like a hammer, when that’s all you have, everything is a nail.
Both. He threatened using the DPA to fix prices but use the SOR to drop prices instead. I still think they would have called his bluff and kept prices high longer if he hadn’t also brought up the DPA.
Gah! He directly interceded on the Port of Long Beach backlog! And as I mentioned, he didn’t introduce price controls, but he most certainly threatened them. And frankly, that’s one that could use more action. My company is still paying about 2-3x for shipping across the board.
This feels like you’re trying to force what actually happened to fit the model, rather than use the empirical reality to inform it. I get that supply and demand are still plugged into the economy, but there are distorting factors that play as much or more of a role in the dynamic picture. We’ve deviated so far from”rational actors” now that it just doesn’t fit anymore.
For the others too?
I can maybe, sort of, if I squint just right, and hold a hand over one eye see how the DPA could be used to fix the price of shipping or meat for government purchase. However, unless that’s turned around and resold to the general public, I’m not sure how that would lower public prices. I’m not sure I could squint enough, probably need a full on blind fold and covering my ears to see how the DPA could set low meat packing prices for the general public.
Maybe for meat (or other protein) producers. To make sure we have a viable domestic supply of food protein. But, that’s not what’s driving US meat prices.
Which would make it a stupid threat that would never pass. On top of being a bad idea too.
What did he do though? Did he threaten to set the price the port could charge for something? Or, did he apply pressure to them to get things moving, which would increase the supply (number of containers moving through port) and hence reduce the price. Obviously not enough, since you’re still paying more. Some of that more is probably port related and some fuel or other stuff too.
Not working with shipping, I’m sure I head but just don’t remember. However, if there was a price being set, I’m sure I would have remembered that. Direct price controls are generally bad after all.
In the case of world events and political actors, I would agree with this.
In the case of business executives, excluding a couple of them, they seem perfectly rational to me. That we’ve created incentives and allowed evolution into situations that align with poor outcomes is the root problem. That the CEO of “Big Company that controls meaningful percentage of supply and is able to collude though indirect price signaling with competitors the price of a widget with inelastic demand and difficult to enter market” is willing and implements excess price hikes, increases profit, and stock buy backs, all of which perfectly align with their own individual incentives isn’t a surprise at all. At this point, it would be irrational for them to do the reverse. We would like them to do the reverse, but that’s wishful thinking to go against their own aligned interestest.
For instance, had I won the $1 Billion power ball. I could have afforded to pay all the Boing Boing bills and completely eliminate all advertising on the site for everyone for some duration of time. Including the Boing Boing store. Doing that would have been an irrational use of funds however. The rational thing would be to pay off my mortgage and those of my family. Maybe buy a nice car too.
You might be looking at the wrong section. 
The DPA covers price gougingduring a regional or national emergency.
ETA:
Here’s a concrete example of the mass irrationality of corporate executives: study after study shows the benefit of unions to corporate success. Companies that have at least partial unionization of their workforce are more successful over time than ones that exclude unions. Yet here’s Amazon, Starbucks, hospital systems, etc. that are fighting unionization in ways that affect their top and bottom lines and their public reputation. It’s simply irrational, yet they persist.
Thanks. I was thinking compelled production and moving to the front of the line. The government compelling someone to supply them instead of whatever they were already supplying and for a set price. Totally missed gouging. That’s on me.
Either way, this discussion is still better than the stuff I’m supposed to be working on.
