mani
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Post by mani on Oct 14, 2023 16:17:50 GMT
Edit to add - "or to fall to the pre-pandemic level until late 2024." The Zillow average home price for the 12 months in 2020 (let's call it mostly pre-pandemic Covid payments) was $254,639 or $93,899 higher than Sep 2023. That would mean that homes may come down 27% on average if his prediction is true. There is 20% inflation baked in that is not coming down (no one would accept 20% cuts on salaries to go back to 2019 or 2020 incomes). So that leaves only a 7% wiggle room if reverting to a mean that is a proportion of income.
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Post by mnfish on Oct 14, 2023 16:24:16 GMT
I looked at the Zillow Home Value Index and Dec 2022 was $341,524 and Sep 2023 is $348,538 for the US as a whole. S&P/Case-Shiller U.S. National Home Price Index was higher in July 2023 than Dec 2022. Zillow Rent Index was $1,975 in Dec 2022 and $2,047 in Sept 2023. So maybe you should update your numbers. Edit to add - "or to fall to the pre-pandemic level until late 2024." The Zillow average home price for the 12 months in 2020 (let's call it mostly pre-pandemic Covid payments) was $254,639 or $93,899 higher than Sep 2023. That would mean that homes may come down 27% on average if his prediction is true. I think you are confusing price levels and inflation levels. When inflation falls to prepandemic levels, prices still continue to rise, just slowly. Probably am. According to the " Consumer Price Index for All Urban Consumers: Housing in U.S. City Average" from Jan 19 to Jan 20 the inflation rate was 2.7%. From Sep 2022 to Sep 2023 it's 5.5%. In my earlier quote, he did not mention the "rate" of inflation, but "housing inflation to peak" and even though the rate of increase has peaked housing inflation has not peaked, IMO.
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mani
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Post by mani on Oct 14, 2023 17:14:26 GMT
Probably am. According to the " Consumer Price Index for All Urban Consumers: Housing in U.S. City Average" from Jan 19 to Jan 20 the inflation rate was 2.7%. From Sep 2022 to Sep 2023 it's 5.5%. In my earlier quote, he did not mention the "rate" of inflation, but "housing inflation to peak" and even though the rate of increase has peaked housing inflation has not peaked, IMO. I think newtecher is refering to this: The direction change in January seems clear.
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Post by mnfish on Oct 15, 2023 10:46:49 GMT
Just a little color on the real cost of housing inflation. 30yr mortgage rates have gone up about 85%. So, if you borrow $280k ($350k less 20% down), in 30 years you will have paid 146% more interest at 7.5% than 3.5%.
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Post by yogibearbull on Oct 15, 2023 11:27:25 GMT
Housing enters the CPI via owner's equivalent rents (OERs) & rents that may lag other housing indicators (home values, new mortgage payments) by as much as 18 months. In some economic cycles, the other housing indicators may have fluctuated a lot, but the OERs barely budged. In other words, the housing contribution to CPI, although large, is made extremely smooth.
Most volatile factors are food and energy, so that is why there are CPI and Core CPI (ex-food, ex-energy).
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Post by anitya on Oct 15, 2023 16:26:55 GMT
Housing enters the CPI via owner's equivalent rents (OERs) & rents that may lag other housing indicators (home values, new mortgage payments) by as much as 18 months. In some economic cycles, the other housing indicators may have fluctuated a lot, but the OERs barely budged. In other words, the housing contribution to CPI, although large, is made extremely smooth. Most volatile factors are food and energy, so that is why there are CPI and Core CPI (ex-food, ex-energy). yogibearbull , Why use presumed proxies, when actual rent info is more readily available these days compared to even 10 yrs ago. Some of these proxies, especially the favored OER is a survey. Everyone is emotionally invested in their home. In any case, economic surveys have become like polls at election time. The proxies result in lags for pausing, tightening, and loosening. We need to adopt 21st century information. Is there any push to adapt less lagging methods?.
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Post by uncleharley on Oct 15, 2023 16:32:40 GMT
Housing enters the CPI via owner's equivalent rents (OERs) & rents that may lag other housing indicators (home values, new mortgage payments) by as much as 18 months. In some economic cycles, the other housing indicators may have fluctuated a lot, but the OERs barely budged. In other words, the housing contribution to CPI, although large, is made extremely smooth. Most volatile factors are food and energy, so that is why there are CPI and Core CPI (ex-food, ex-energy). yogibearbull , Why use presumed proxies, when actual rent info is more readily available these days compared to even 10 yrs ago. Some of these proxies, especially the favored OER is a survey. Everyone is emotionally invested in their home. In any case, economic surveys have become like polls at election time. The proxies result in lags for pausing, tightening, and loosening. We need to adopt 21st century information. Is there any push to adapt less lagging methods?. Every individual investor wants faster, more accurate data. The problem is that Institutional change is evolutionary rather than revolutionary. jmho
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Post by yogibearbull on Oct 15, 2023 16:41:59 GMT
anitya, I have no idea of possible BLS changes. But as it is now, the OERs & rents EXCLUDE the costs related to utilities, parking, furnishings, taxes, mortgage, property maintenance & improvement to estimate basic shelter costs. The data are sampled every 6 months, consolidated & then the 6th-root of the change is used in monthly inflation indexes. Just this January 2023, the BLS made a change for housing: Housing owner's-equivalent-rent (OERs) will take into account neighborhood level mix of multifamily and single-family housing. For data series that go back decades, changes are infrequent. I am just pointing out why there is such a large lag in the housing data used in the CPI. People often assume otherwise due to huge weight assigned to housing in CPI (about 40%).
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Post by anitya on Oct 15, 2023 21:19:53 GMT
Employees working at BLS and a bunch of other Govt organizations have a vested interest to keep doing things in an inefficient manner - job preservation. If you look at the number of US Govt employees over the past 10 years, it is the same or higher. I do not see the gains from computerization, automation, and improved processes. I am not seeing much of an evolution of US Govt. The other day I was listening to UAW leader of the Ford Kentucky plant talk on the TV. He goes on to tell us that both his young sons work in the same plant and plan to make a career out of those jobs and he wants job guarantees for them and all of the other employees, given the threat from EVs. It must be a good job; otherwise, why would generation after generation keep doing the same line of work? All of the above misallocation of resources is inflationary. You see the same problems at other Govt levels, including state and local levels. I do not know what the root of the problem is - sometimes I ask myself if it is the duopoly political parties. If not for our rule of law which attracts a lot of immigrants to the US, we would be screwed. Week in Charts from Charlie Bilello (the first segment and again from 17 min mark covers inflation) - www.youtube.com/watch?v=TNB_oDMm86E&t=1010s
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Post by mnfish on Oct 16, 2023 12:48:00 GMT
Truflation website now measures "US Inflation Aggregated". Their numbers indicate a 23.9% increase in inflation since Jan 2020. In May of 2021 - "I'm predicting here that over the next two, three years, we could easily have 20% inflation with this increase in the money supply," Siegel said in a recent interview with CNBC." Not a bad prediction.
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Post by yogibearbull on Oct 16, 2023 13:09:28 GMT
Government data can do only so much. That is why many firms/institutions produce and distribute their own economic data, estimates and projections. For housing, there are Case-Shiller Home Indexes that provide lot of info about the current prices nationally and regionally (that is Robert Shiller of Yale who also has the PE10 or CAPE). en.wikipedia.org/wiki/Case%E2%80%93Shiller_indexFRED (by St Louis Fed) also includes Case-Shiller Home data. fred.stlouisfed.org/graph/?g=19l9DIt is important to keep the data current and refreshed, but if the methodology is changed too frequently, the data history becomes less useful.
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Post by Chahta on Oct 16, 2023 13:21:11 GMT
Truflation website now measures "US Inflation Aggregated". Their numbers indicate a 23.9% increase in inflation since Jan 2020. In May of 2021 - "I'm predicting here that over the next two, three years, we could easily have 20% inflation with this increase in the money supply," Siegel said in a recent interview with CNBC." Not a bad prediction. Ah yes, the money supply. Just keep printing and spending. Of course "they" want us to believe that is not the cause of inflation. Now with 2 wars to pay for and maybe more on the way it may become worse. Of course WW2 brought prosperity back to the US economy so let's look on the bright side. This quoted post above sums how I feel about inflation numbers. "Truflation" is different for everyone. The Fed and government can publish CPI, PPI, core inflation etc., but it is what each person feels in their life. Reading about families using credit cards to live on says a lot. They are not only paying higher price (or spending more), but paying interest they may not normally pay. There is also the "hidden" price increases. Many products are staying the same price, but less of it in the box. That requires buying more at the same price. The inflation numbers published are far from reality IMHO. They are just a number.
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Post by archer on Oct 16, 2023 15:37:38 GMT
The current tracking of inflation as a true measurement of impact is approximate at best, looking at the long term picture, say going back to the late 70's early 80s. Some items haven't increased in price much. I can buy a TV now for less than I did 40 years ago, and it will be larger and have a much better picture. Cars cost more now, but they have come a long way with performance, economy, and safety. I bet if manufacturers were to produce the same car as back then, the cost would be about 2/3 of todays cost. Rents on the other hand have increased tenfold, at least in my area, and that is a large chunk of a renters overall budget. Food has increased but it's impact is only proportional to how poor one is. Add kids and the impact is even more severe for the low incomed. ((I beg to differ with spell-check. When I make up a word (incomed) it can't be misspelled)).
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mani
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Post by mani on Oct 16, 2023 15:46:27 GMT
Employees working at BLS and a bunch of other Govt organizations have a vested interest to keep doing things in an inefficient manner - job preservation. If you look at the number of US Govt employees over the past 10 years, it is the same or higher. The population just in the last 10 years (long after computers have been implemented in governments) still grew 6%. If they do the same work (or even more) with the same amount of employees they are getting more efficient. Many jobs also just require a certain amount of employees per person served regardless of how efficient one person is.
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Post by uncleharley on Oct 16, 2023 15:51:52 GMT
An average rate of inflation of 6.8% or so over the next 3 yrs for the national economy sounds a bit high or perhaps scarey. My spelling is also correct.
Added by edit: My weekly chart for the value of the USD does indicate that a drop of about 17% over the next 1.5 to 2 yrs has real technical potential.
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mani
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Post by mani on Oct 16, 2023 15:52:47 GMT
This quoted post above sums how I feel about inflation numbers. "Truflation" is different for everyone. The Fed and government can publish CPI, PPI, core inflation etc., but it is what each person feels in their life. Reading about families using credit cards to live on says a lot. Too many families live above their means. As for "personal inflation", for some it might be worse but for all homeowners with a fixed rate mortgage (often a significant part of their spending) it is much less. Maybe 50% of my what my spending goes on has seen inflation. My mortgages are fixed, my income has gone way up (following inflation), I am therefore much better off with lots of new disposable income.
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Post by Deleted on Oct 16, 2023 15:53:06 GMT
It was mentioned here that the U.S. is now paying for two regional wars. I would venture a guess that when the smoke has cleared we will be paying for reconstruction so it can be completed in time to start the cycle over again. OMG!
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Post by uncleharley on Oct 16, 2023 16:00:45 GMT
It was mentioned here that the U.S. is now paying for two regional wars. I would venture a guess that when the smoke has cleared we will be paying for reconstruction so it can be completed in time to start the cycle over again. OMG! We are not paying for the mid east war yet. The house is incapable of approving funding at this time.
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Post by anitya on Oct 16, 2023 17:34:29 GMT
Employees working at BLS and a bunch of other Govt organizations have a vested interest to keep doing things in an inefficient manner - job preservation. If you look at the number of US Govt employees over the past 10 years, it is the same or higher. The population just in the last 10 years (long after computers have been implemented in governments) still grew 6%. If they do the same work (or even more) with the same amount of employees they are getting more efficient. Many jobs also just require a certain amount of employees per person served regardless of how efficient one person is. 6% cumulative increase in population and US Govt employee count increased by a cumulative 4% over the past 10 years. I am not aware of any company or organization that would survive with that type of (lack of) efficiency gain, unless it is a monopoly. I think we have digressed from my original point, which is using too much lagged data causes FED actions to be lagged and is inefficient. Nobody is asking to change their methodology every minute. There is too much political interference with the FED for them to operate optimally. Tragically, the consequences of FED's actions are not limited to the US shores and transmit around the globe. Any way, I am not trying to fight or change "What Is" and am fine with status quo. I was only observing - may be I should keep my observations to myself.
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mani
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Post by mani on Oct 16, 2023 18:17:41 GMT
Any way, I am not trying to fight or change "What Is" and am fine with status quo. I was only observing - may be I should keep my observations to myself. Sharing is great. Nothing wrong with that. The idea I think of such forums is to get our attention pointed to our own blindspots. If it's all consensus it would be rather useless.
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Inflation
Oct 17, 2023 8:16:48 GMT
via mobile
Post by FD1000 on Oct 17, 2023 8:16:48 GMT
Inflation was interesting and had influence on stocks in 2022. In 2023 inflation is lower...and SPY is higher by 15+%.
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Post by mnfish on Oct 17, 2023 10:22:36 GMT
An average rate of inflation of 6.8% or so over the next 3 yrs for the national economy sounds a bit high or perhaps scarey. My spelling is also correct. Added by edit: My weekly chart for the value of the USD does indicate that a drop of about 17% over the next 1.5 to 2 yrs has real technical potential. The quote from Seigel was from 2021 not 2023.
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Post by mnfish on Oct 23, 2023 11:23:00 GMT
Powell on 10/19 - "Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal," "The path is likely to be bumpy and take some time...My colleagues and I are united in our commitment to bringing inflation down sustainably to 2%."
As far as the unemployment rate, that is a lagging indicator of a recession. Just because it's taking a long time to rise doesn't mean it won't happen. Whether we have a soft or hard landing, the level of where we land is the question.
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Post by mnfish on Oct 24, 2023 11:30:56 GMT
Debt has enabled us a higher standard of living than we have earned. It's sobering to look at it this way but US debt can be compared to an individual without a job who somehow was able to get a bunch of loans, bought a nice big house and a large garage full of exotic cars. The example is perhaps exaggerated and the consequences are believed to be different. While it seems unlikely that our debt will be called in, at some point it will be harder for the Gov to access money. Eventually it will be come obvious that the US isn't a safe place to lend money to. THen we will have to do with less, finally. Since we are quoting Ben, I found him quoted in this US debt article, "Rather go to bed without dinner than to rise in debt." I found the article a good read. Debt has not given me anything but inflation and higher taxes. The debt is wasted on things like money sent to Ukraine. Buffett stated, “I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.”
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Post by newtecher on Oct 24, 2023 12:46:40 GMT
What a difference a day makes! WTIC futures are up 4.78% this morning. Guess where the price og gasoline is going. Nat Gas is at a 10 month high. If you look at a graph over the last month, you will see what I am talking about. The wholesale gasoline prices have jumped up and down since Oct 6 but are still essentially where they were on Oct 6 (just before the Hamas attack) and at year's lows. We shall see about which way the gasoline prices end up in a few weeks. Sounds like you think they are going up, I think they are going down. Gasoline prices have fallen about 30 cents from the peak, reversing the large increase we saw in late July and August. That will affect Oct inflation prints (released in mid-November) Based on the wholesale prices, prices should continue to decrease some more.
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mani
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Post by mani on Oct 24, 2023 13:19:19 GMT
Buffett stated, “I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.” Flexibility is needed but not being able to achiueve 3% in good time is bad. We surely can cut some things (hit medicare hard as a starter, or mix it with medicaid and let people who want higher level of care pay for it). Corporate taxes need to be look into as well, they are down to a trickle. Are they close to the lowest ever in % of GDP? Very good breakdown in nice graphics here: www.cbo.gov/publication/58888
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Post by mnfish on Oct 25, 2023 11:25:41 GMT
Buffett stated, “I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.” Flexibility is needed but not being able to achiueve 3% in good time is bad. We surely can cut some things (hit medicare hard as a starter, or mix it with medicaid and let people who want higher level of care pay for it). Corporate taxes need to be look into as well, they are down to a trickle. Are they close to the lowest ever in % of GDP? Very good breakdown in nice graphics here: www.cbo.gov/publication/58888 mani - Also from CBO - See any change from 2019? We keep spending like it's Covid 2020. Revenues Outlays On-Budget Total Debt Held by the Public 2019 $3,463.4 $4,447.0 $-991.3 $16,800.7 2020 $3,421.2 $6,553.6 $-3,142.3 $21,016.7 2021 $4,047.1 $6,822.4 $-2,723.8 $22,284.0 2022 $4,896.1 $6,271.5 $-1,357.5 $24,256.8 Business Income tax collected was $475B in 2022 and $277B in 2019 (IRS)
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Post by Mustang on Oct 25, 2023 18:10:30 GMT
When corporations make more they pay more in taxes. The federal tax bracket for corporate taxes is 21%. Adding in state corporate income taxes the tax rate can be as high as 30% (New Jersey). Doubling corporate taxes would still leave us an annual deficit of almost $900B. But, this increase comes at a cost. Corporation would only be able to invest half as much in research & development, new building, and new equipment, etc Things that create jobs. None of that is tax deductible as it is being spent.
Looking at the table it seem pretty clear that spending is the problem. If outlays were reduced to 2019 levels then we would have a balanced budget
But, there is no consensus on reducing spending. No one wants money coming to them cut and everyone wants someone elses's taxes raised. The way Congress is suppose to work is spending bills originate in the House. There should be 12 separate spending bills. When the House and Senate disagree then a joint committee is formed to reconcile the differences. It's not worked that way for years. Congress started passing omnibus bills full of pork that no one is allowed to read before a last minute vote to avoid a shutdown. So spending continually goes up but never down.
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Post by Deleted on Oct 30, 2023 21:20:19 GMT
From "Neurodiversity Thread" by chang":
"Another observation from the 21st century workplace. I've got a junior team member in an apprentice position, who is AWOL 80% of the time. Constantly calling in sick due to "stress" and "nerves". Can't follow instructions, can't finish a task, can't even arrive in proper business dress.
He's a kid in his early 20s, but obviously he needs something different - probably three years in the Army or Navy. He's not going to thrive in a major London financial services company."
Unfortunately, firing him is out of the question. Nowadays we need to embrace "neurodiversity". Different people's brains work in different ways.
Maybe this guy is really the next Albert Einstein. Or maybe he's a waste of space. Either way, I need to pay him a salary and put up with his absenteeism. Welcome to the 21st century corporate world." ...................................................
I hear this confirmed from my old workplace and others. This has to affect the cost of doing business and is therefore inflationary.
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Post by archer on Oct 30, 2023 22:03:17 GMT
@axe, I had an employee years ago in construction. He came in late to work one day and I was working around the back of the house and heard him yelling in the front. I went up to check it out and the neighbor bumped the back bumper of his his truck and but a barely visible mark on his Oakland Raiders sticker (of all things! the nerve of him!). He and the neighbor were having a stand off and the neighbor was seriously afraid. I calmed him down, and then told him I had to let him go, and that he was fired. He made a claim with unemployment, which I contested because I didn't think this was a valid claim and I didn't want it on my unemployment record. The guy actually won his case even though his and my account of his behavior were in agreement. I guess this is another case of neurodiversity. High testosterone and low seritonin.
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