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What's Up With Inflation and All These Shortages?

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  • #31
    Originally posted by kork13 View Post
    What company? For starters, I'd point to the 8-10 massive food conglomerates (Coca Cola, Pepsi, Unilever, Nestle, Kraft-Heinz, Kellogg, General Mills, etc.) that control nearly every large food/drink/consumer staple brand in the world. Sure, they've still produced large absolute profits ($B), but that's beside the point -- their product development, growth, and profit margins have been lower than historical averages for a long time. This sector's average profit margin traditionally sits around 22-25%, but has languished around 14-18% since 2007-2008. It's also categorically one of the lowest-performing sectors in the market. It doesn't surprise me at all that they'd take an opportunity bump prices disproportionate to their imputed cost increases. I'm only saying that this sort of opportunism is one of many reasons that prices for many goods/services have suddenly jumped by 25%-50% in the last year.

    As you said, not every aspect of our economy is facing shortages & interruptions... But nearly every aspect of consumer life is facing dramatic price increases. That fact begs the question of what else is happening. As with everything else in our interconnected world, there's not ever one single answer -- rather, it's going to be alot of different factors combining to drive the visible result that is apparent.

    No, it really doesn't. As you so eloquently quoted above, "It's the economy, stupid". I do, of course, encourage open eyes and ears and to objectively look at information and all possible causes. But your question (bolded above) is similar to renegade's in the way it inspires doubt -- and possibly fear -- that there's something not readily seen going on here. This is literally market forces at work while the globe suffers the late stages of pandemic. Of course, that requires one acknowledge that there IS actually a pandemic, which some people on this board have actually doubted, and alleged some kind of conspiracy behind that, too.

    Here, read this: https://theconversation.com/why-glob...history-168210

    Is it not painfully obvious, with regards to food, that increases in fuel prices, decreases in labor availability, logistics and transportation constraints, climate change, and the fact that 700,000 people just died in this country alone...all happening in a short period..might affect food prices? And that those reasons might be the dominant, primary reasons we're seeing such abrupt increases?

    But you're probably right...it's something else.

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    • #32
      Originally posted by ua_guy View Post
      Is it not painfully obvious, with regards to food, that increases in fuel prices, decreases in labor availability, logistics and transportation constraints, climate change, and the fact that 700,000 people just died in this country alone...all happening in a short period..might affect food prices? And that those reasons might be the dominant, primary reasons we're seeing such abrupt increases?

      But you're probably right...it's something else.
      Ugh... I'm not spouting or giving credence to any conspiracies, get off your counter-COVID-denier defensive high horse. If that's your concern, I'm not your enemy here, I'm agreeing with you. I'm only saying that there's alot more involved in the current period of high inflationary forces than any one factor (or a few), and trying to open the discussion to the question of what those factors may be. I commented on one of those aspects, and it's since been taken out of context.

      Another question worth asking: Is this inflation going to stick around as the 'new normal', or will the currently-surged prices drift back down as the accordion of ongoing impacts evens out over the coming months/years? If this becomes the new baseline, only to continue to tick upward over time, then it becomes a more concerning situation, against which the Fed & government writ large should be taking more aggressive actions against.
      "Praestantia per minutus" ... "Acta non verba"

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      • #33
        Originally posted by kork13 View Post
        Ugh... I'm not spouting or giving credence to any conspiracies, get off your counter-COVID-denier defensive high horse. If that's your concern, I'm not your enemy here, I'm agreeing with you. I'm only saying that there's alot more involved in the current period of high inflationary forces than any one factor (or a few), and trying to open the discussion to the question of what those factors may be. I commented on one of those aspects, and it's since been taken out of context.
        That's fair and I'm sorry if it felt like an attack. Agreed that there are multiple forces at work and high complexity to these price increases. Where I dig in is this idea that the primary/dominant forces are not discernible by anyone paying attention or that the price increases are a conspiracy. Your question about "what else is happening" appeared to lean towards one or both of those ideas. Your additional clarification puts it in context and I see that's not really what you were getting at.

        Your last question is a good one. Personally, I don't know and I hope others will offer their insight. I am having a hard time sizing the current labor movement and surge in wages and how that will affect pricing and goods going forward, but I think it will play a significant role.

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        • #34
          Originally posted by ua_guy View Post

          That's fair and I'm sorry if it felt like an attack. Agreed that there are multiple forces at work and high complexity to these price increases. Where I dig in is this idea that the primary/dominant forces are not discernible by anyone paying attention or that the price increases are a conspiracy. Your question about "what else is happening" appeared to lean towards one or both of those ideas. Your additional clarification puts it in context and I see that's not really what you were getting at.

          Your last question is a good one. Personally, I don't know and I hope others will offer their insight. I am having a hard time sizing the current labor movement and surge in wages and how that will affect pricing and goods going forward, but I think it will play a significant role.
          You guys are asking a great question here, which I've been asking myself the past couple of days also...and that is: What happened? How did we this inflation and jacked up supply chain situation?
          james.c.hendrickson@gmail.com
          202.468.6043

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          • #35
            Originally posted by kork13 View Post
            Another question worth asking: Is this inflation going to stick around as the 'new normal'
            That's a great question. We all know that prices are always much quicker to rise than they are to fall. I think things that normally have pretty variable pricing will respond quickly - stuff like gasoline where the price changes daily anyway, up or down. And raw material prices like lumbar will come down. Where it might take longer, if at all, is food prices. Once your local restaurant has printed new menus with their new higher prices, they aren't going to be so quick to lower those prices. You'll probably be paying those higher prices for the foreseeable future. Maybe they won't rise again for quite some time, though, so it may even out over time.
            Steve

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.

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            • #36
              Originally posted by kork13 View Post
              Another question worth asking: Is this inflation going to stick around as the 'new normal', or will the currently-surged prices drift back down as the accordion of ongoing impacts evens out over the coming months/years?
              This is timely...

              Reuters: "Corporate chiefs see prices moving in only one direction"

              FWIW, my best guess is that this inflation will be somewhat transitory in certain sectors (particularly ones where pricing is always quite fluid), but for the most part, these inflated prices will become normalized over the next year or two as the impact of current issues fades.... Resulting in today's inflation sticking around, not being transitory.
              "Praestantia per minutus" ... "Acta non verba"

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              • #37
                Originally posted by kork13 View Post

                This is timely...

                Reuters: "Corporate chiefs see prices moving in only one direction"

                FWIW, my best guess is that this inflation will be somewhat transitory in certain sectors (particularly ones where pricing is always quite fluid), but for the most part, these inflated prices will become normalized over the next year or two as the impact of current issues fades.... Resulting in today's inflation sticking around, not being transitory.
                I am predicting grocery prices to be transitory, restaurant prices not to be. I believe many industry that was hit the hardest from the pandemic will most likely try their hardest to make up for that deficit by making higher margins even if their material cost have decreased.

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                • #38
                  I think that food prices are going to get worse. Currently, the central valley of California is a big dust bowl. Many fields were not planted as there was not enough water to go around. The central valley provides a big portion of the nation's produce.

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                  • #39
                    Originally posted by Petunia 100 View Post
                    I think that food prices are going to get worse. Currently, the central valley of California is a big dust bowl. Many fields were not planted as there was not enough water to go around. The central valley provides a big portion of the nation's produce.
                    Yes. Climate change is going to continue to affect the food supply among many other things. The shipping issues are expected to persist well into 2022 if not longer. Add in higher gas prices and ongoing worker shortages and the outlook isn't great for prices to come down.
                    Steve

                    * Despite the high cost of living, it remains very popular.
                    * Why should I pay for my daughter's education when she already knows everything?
                    * There are no shortcuts to anywhere worth going.

                    Comment


                    • #40
                      Originally posted by disneysteve View Post

                      Yes. Climate change is going to continue to affect the food supply among many other things. The shipping issues are expected to persist well into 2022 if not longer. Add in higher gas prices and ongoing worker shortages and the outlook isn't great for prices to come down.
                      I think that we should be working on long-term solutions. Grow more food locally and shipping becomes less of a problem. Also, with rising seas, we are going to lose good farm land. Why aren't we building big green houses so that produce can be grown in more places? We should be.

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                      • #41
                        Was listening to marketplace that inflation on groceries are here through 2022. They said the food processing plants are not running at capacity and farming is not the same. And yep Petunia they mentioned the draught in california as part of it too. They said USA is used to cheap food. We might have to suffer through not having enough.
                        LivingAlmostLarge Blog

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                        • #42
                          Originally posted by LivingAlmostLarge View Post
                          Was listening to marketplace that inflation on groceries are here through 2022. They said the food processing plants are not running at capacity and farming is not the same. And yep Petunia they mentioned the draught in california as part of it too. They said USA is used to cheap food. We might have to suffer through not having enough.
                          yep, I figure you got four options to deal with this stuff.


                          1. Stock up. - To heck with it, it might be time to hoard.
                          2. Buy I-Bonds or TIPS, so get investment products linked to inflation.
                          3. Make friends - when times are hard, you want community
                          4. Buy stock - its still giving the best returns.

                          james.c.hendrickson@gmail.com
                          202.468.6043

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                          • #43
                            In Los Angeles for a dozen large eggs I paid $2.99, it used to be $1.99. Couldn't find a 5 lb bag of Idaho russet potatoes ($2.50) so got a 3 lb bag of red potatoes for $2.99. I think for kale i paid $1.99 when it used to be .99 cents. Rotisserie chicken was the same at $6.99, I know Costco is $4.99 but a single guy like me doesn't need a bulk 100-pack of everything so no membership for me. Gas is $4.19 when it was $3.99 for quite a long time. Avocados is 4 for $5 for small sizes. Large is 2 for $5. I eat one avocado everyday for breakfast. When I find a bruised one and throw it away I see it as $1.25 wasted, bummers. And I come across a lot of bruised avocados.

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                            • #44
                              Originally posted by james.hendrickson View Post

                              yep, I figure you got four options to deal with this stuff.


                              1. Stock up. - To heck with it, it might be time to hoard.
                              Stock up on what? What should be hoarded?

                              Doesn't hoarding during a shortage beget more shortages, and more hoarding? I'm not sure hoarding makes any sense.

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                              • #45
                                It's almost time to start worrying about yourself. If shortages get worse I'll be hoarding and getting ready. My family isn't going to starve, that I can guarantee.

                                This is all part of the grand plan though and people just disregard what's really happening.

                                I need to pick up black semi gloss spray paint to finish restoring a couple dumbbells. I already see Lowes doesn't have it. My local hardware store better.
                                Last edited by rennigade; 10-23-2021, 02:18 PM.

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