|
Post by richardsok on Oct 30, 2023 23:53:03 GMT
The average Vancouver home is currently priced at about $1.2 million. The average Vancouver college grad in his/her late 20s/early 30s makes about $68,000. So a married couple with both working full time have a combined annual salary of about 11% of the average home.
When I was a young single guy, the first property I bought was a Philadelphia triplex priced at about 3x my annual salary.
No wonder young folks are angry -- they're just angry in the wrong direction.
|
|
|
Post by archer on Oct 31, 2023 0:38:55 GMT
IIRC in the mid '80s banks liked to see mortgages be 2.5x income or less. I remember my neighbors when I bought our first home. They had recently retired and were living in their first home with a $70 mortgage, while I was barely qualifying for our ~$750 payments. 20 years I was in the same place as my neighbors were. It is important to make that 1st home purchase in younger years, but it is seeming harder. In the mid '80s a journeyman tradesman could buy a starter home in CA on a single income. When both couples have to work and pay for childcare, it can be stressful unless they have high paying jobs.
|
|
|
Post by archer on Oct 31, 2023 22:37:40 GMT
I'm wondering how inflation will play out with the unions winning some pretty favorable (for workers) negotiations. With the UAW out of the way, more are in process. Wages are in a process of catching up with inflation which will cause prices to go up. Are we embarking on Powell's fear of entrenched inflation? Inflation will continue until people stop buying. That isn't likely to happen as long as people consumers continue to get pay increases. I read that more than any other generation, retirees are spending more than workers. Maybe the markets need to make a major decline in order to bring demand back in line. Increased interest rates for businesses just leads to higher prices as long as people keep buying. Ford states that over the next year the average price increase for vehicles will be around $1000. due to the wage settlement. I guess if prices don't increase more for other reasons $1K is good as it is barely over 2%.
|
|
|
Post by retiredat48 on Oct 31, 2023 22:51:05 GMT
archer,...We are also getting inflation by gvt edict...such as in California with new law for $20 min wage for McDonald's type workers. And in Florida where the people voted in a constitutional amendment to raise min wage about 12% a year for next four years. imagine, allowing people to vote themselves a raise! R48
|
|
|
Post by archer on Oct 31, 2023 23:32:46 GMT
archer ,...We are also getting inflation by gvt edict...such as in California with new law for $20 min wage for McDonald's type workers. And in Florida where the people voted in a constitutional amendment to raise min wage about 12% a year for next four years. imagine, allowing people to vote themselves a raise! R48 Your post really hits home the delicate balance of employment/unemployment necessary to keep inflation in a reasonable trend.
|
|
|
Post by roi2020 on Nov 1, 2023 6:56:51 GMT
archer ,...We are also getting inflation by gvt edict...such as in California with new law for $20 min wage for McDonald's type workers. And in Florida where the people voted in a constitutional amendment to raise min wage about 12% a year for next four years. imagine, allowing people to vote themselves a raise!R48 In a similar vein... It's not uncommon for corporate boards to rubber-stamp high pay increases for CEOs (sometimes regardless of job performance).
|
|
|
Post by retiredat48 on Nov 1, 2023 15:33:17 GMT
archer ,...We are also getting inflation by gvt edict...such as in California with new law for $20 min wage for McDonald's type workers. And in Florida where the people voted in a constitutional amendment to raise min wage about 12% a year for next four years. imagine, allowing people to vote themselves a raise!R48 In a similar vein... It's not uncommon for corporate boards to rubber-stamp high pay increases for CEOs (sometimes regardless of job performance).In a similar vein...while true, the financial impact of CEO pay is miniscule on overall impact on inflation. Further proof...CEO pay increases were also very high annual % for last decade, with only small inflation outcome. There is no cause/effect. Also note. If we have a CEO two line simplified tax return of: L1: How much did you earn last year. L2: Send it in! Would only have minimum effect on lowering the debt. R48
|
|
|
Post by archer on Nov 1, 2023 16:30:09 GMT
According to Bard, the total annual pay for workers including benefits is estimated to be 11.2 Trillion for 2023. Bard puts an estimate for CEO pay at about 1 Trillion, however it also states that there isn't any single source of information to track this, so it is hard to give a good estimate. The best we can do for CEO estimates is to take the average CEO pay multiplied by the number of CEOs. Thus the ~$1T.
As far as the impact on inflation, with the above we are looking at 1/10th the burden on business and thus inflationary impact. Also, I am guessing CEOs probably spend a lower % of their income. This means a smaller contribution to increased demand.
|
|
|
Post by retiredat48 on Nov 1, 2023 16:58:33 GMT
As far as the impact on inflation, with the above we are looking at 1/10th the burden on business and thus inflationary impact. Also, I am guessing CEOs probably spend a lower % of their income. This means a smaller contribution to increased demand. Absolutely. I called this the Oprah Winfrey effect to my spouse. That is, Oprah made $89 million a year. But she cannot spend this. Only so much one can buy on food/travel/utilities etc. Like, I would tell my wife: Look, today we went to best high-goal Polo in Wellington FL, tailgate picnic lunch with friends, all invited to dinner by a polo patron who founded Outback Steakhouse at his 40 foot outdoor grill. All at zero cost. We did the same as Oprah could do, even if Oprah paid for all of her eating etc. Rinse and repeat similarly each day. My spouse came to really appreciate our early retirement. R48
|
|
|
Post by roi2020 on Nov 2, 2023 2:51:52 GMT
In a similar vein... It's not uncommon for corporate boards to rubber-stamp high pay increases for CEOs (sometimes regardless of job performance). In a similar vein...while true, the financial impact of CEO pay is miniscule on overall impact on inflation. Further proof...CEO pay increases were also very high annual % for last decade, with only small inflation outcome. There is no cause/effect. [snip] You are correct. My original response wasn't very clear. It was intended to highlight the similarities of CEO pay hikes and "allowing people to vote themselves a raise."
|
|
|
Post by archer on Nov 2, 2023 16:24:59 GMT
I found today that unit labor cost were projected to come in at .7% increase, but came in at -.8% instead. This decline could bode well for inflation, and perhaps ward off future fed hikes.
|
|
|
Post by johntaylor on Nov 2, 2023 16:40:14 GMT
Stopped after a hike the other day for an "Impossible Whopper" at Burger King, and wondered about this:
Team Member $14.59 per hour
General Mgr $20.63 per
Assistant Mgr $17.74
|
|
|
Post by archer on Nov 2, 2023 17:00:02 GMT
Team member below min. wage of $15.50?
|
|
|
Post by bb2 on Nov 2, 2023 19:06:52 GMT
|
|
|
Post by newtecher on Nov 14, 2023 15:02:29 GMT
The inflation in August was 0.63% (rounded down to 0.6 in the press release). About 0.4% of that 0.6% is due to the ~11% change in gas prices. Shelter contributed the rest. The used car data contributed negatively (-1.2%, deflationary), as expected in my previous post, though I expected it to be much more negative based on private data. The big drop in used car component of CPI-U will probably happen next month. The CPI-U inflation over the last 12 months (since August 2022) now averages 3.7% annualized. Based on TIPS pricing, the expected (breakeven) inflation is approximately 1.9% annualized over the next 6 months and 2.5% over the next year. I still believe it will be lower, in part because I am expecting a recession within the next 6 months or so. I believe the student loan repayment restarting in October is a big and sudden drag on the economy, equivalent to fiscal tightening by 0.5-1% of GDP, exacerbating the slowdown that has been going on for several months now. My guess is that economic data will turn very negative in Oct-Dec 2023. As I mentioned in another thread, long-term treasuries are a great value right now. I am certainly buying them in all my accounts myself (before the economic data turns negative and the yield drop). The inflation print was 0.4% (very little rounding involved) in September. About 0.2% of that 0.4% is due to shelter. I am not sure why shelter is now accelerating given that real time rent indices are are falling or rising very slowly. The assumption was that it still catching up due to lags but he total increase in CPI-U rents is now larger since 2019 that in private indices. In ether words, the lagged CPI-U measure has caught up already is now running ahead of the real-time private indices. The drop in used car pricing happened but was again much smaller than expected. Based on TIPS pricing, the expected (breakeven) inflation is approximately 2.8% annualized over the next 6 months and 2.3% over the next year. In inflation was 0.04% (rebounded down to 0) in November (0.5% annualized), with YoY number down to 3.2%, mostly driven by gasoline. The gasoline prices dropped dramatically, as I expected in previous posts on this thread, and continues to drop (probably another 15 cents per gallon down from here based on wholesale prices). The November CPI read will likely again be very low or negative as well due to the falling gas prices. Used cars are going down very slowly. The wholesale prices are now down to early 2021 values but the dealerships are still sitting on inventory bought at high prices and not lowering the prices enough. It will happen eventually. The biggest positive contributor to inflation is car insurance (steady at +20% annualized), which contributes about +0.5% to the overall CPI-U print. These insurance price increases are unsustainable and will come down. Anecdotally, lots of people are now priced out car purchase by insurance companies (rather than just the car prices and interest rates on car loans). Shelter is down to +0.3% MoM from its ridiculous value in September (0.6%) and will continue its lagged decline. Despite the lagged shelter, core is still down to 0.2% MoM. If you still think core is not going down (or believe in the second wave), see Jason Furman's averages here: /photo/1 I still expect a recession before or near year end and we are pretty likely to see YoY inflation prints below 3% for December (released mid-January).
|
|
|
Post by anitya on Nov 14, 2023 18:13:50 GMT
newtecher , Thanks for the Forman tweets. Useful info but I had to mentally reverse engineer those charts to see how the monthly raw data would have looked like. I do not think it is useful to talk about annualized rates when charting monthly data - it is annoying like when somebody makes a trade and posts how much they made annualized. If you find on the web the same charts without annualized rates, please post. May be BLS has and I should check there. Thanks. P.S.: charts are useful to see trends but too many people misuse them to tell a story and so useful info is lost.
|
|
|
Post by newtecher on Nov 14, 2023 18:56:20 GMT
newtecher , Thanks for the Forman tweets. Useful info but I had to mentally reverse engineer those charts to see how the monthly raw data would have looked like. I do not think it is useful to talk about annualized rates when charting monthly data - it is annoying like when somebody makes a trade and posts how much they made annualized. If you find on the web the same charts without annualized rates, please post. May be BLS has and I should check there. Thanks. P.S.: charts are useful to see trends but too many people misuse them to tell a story and so useful info is lost. For these low numbers, you can just divide by 12 to get non-annualized numbers. You can also use FRED to see raw monthly changes. Here is the link for core CPI monthly inflation: fred.stlouisfed.org/graph/?g=1bndt
|
|
|
Post by anitya on Nov 14, 2023 19:23:18 GMT
newtecher , Thanks for the Forman tweets. Useful info but I had to mentally reverse engineer those charts to see how the monthly raw data would have looked like. I do not think it is useful to talk about annualized rates when charting monthly data - it is annoying like when somebody makes a trade and posts how much they made annualized. If you find on the web the same charts without annualized rates, please post. May be BLS has and I should check there. Thanks. P.S.: charts are useful to see trends but too many people misuse them to tell a story and so useful info is lost. For these low numbers, you can just divide by 12 to get non-annualized numbers. You can also you Fred to see raw monthly changes. Here is the link for core CPI monthly inflation: fred.stlouisfed.org/graph/?g=1bndt That is what I did ("mentally reverse engineer?") when I read your previous post. Bar chart (vs line chart) is easy on the eyes for monthly numbers. Thanks anyway.
|
|
|
Post by newtecher on Nov 14, 2023 20:01:32 GMT
|
|
|
Post by anitya on Nov 14, 2023 20:03:51 GMT
Core has been doing lower highs since December 2021 - nearly two years. It will be interesting if November number comes in at or below June-July 2023 numbers (the current cycle lows at below 2%, annualized).
April 2021 was the current cycle high at the annualized rate of 9% and it was like that for three months but that did not freak the FED out and they did not start to raise rates until March 2022 when the Core was 3.5-4% (they waited for nearly a year after us in the peanut gallery started freaking out). My point is, (conversely or inversely) how long continuously does the Core needs to be at 2-2.5% before the FED decides to cut and what is the likely neutral fed fund rate in this cycle? I get that everything depends on if, when, and how deep a recession we get.
Please share if you see someone out there putting together an intelligent analysis answering the question.
|
|
|
Post by anitya on Nov 14, 2023 20:09:16 GMT
Thanks for doing that. I have a very poor memory and should have known FRED features. I took the liberty to change the dates to two years in your chart - fred.stlouisfed.org/graph/?g=1bnlG#0My edits are not sticking. I am way late to other things and got to run.
|
|
|
Post by yogibearbull on Nov 14, 2023 22:49:38 GMT
anitya , just below the chart, FRED has "Share Links" that offers 3 options: Page short URL (I use this most of the time as this links to the whole page with related notes), Embed in website (I never tried it), Image short URL (I tested it but it is barebone image that may lead to even more questions). This way of linking preserves all of the settings used (dates, multi-charts, etc).
|
|