U.S. Inflation Relief Kicking In

dilettante

dilettante

Well-known Member
Location
Michigan
While the media put a hard negative spin on things, they can't duck the fact that U.S. inflation has slowed to the lowest rate in 4 years. April 2025 figures came in well below March.

Gasoline and groceries have become more affordable, not to mention eggs in particular which have fallen quite a bit.

Set aside any politics. This is good news for American consumers.

Annual inflation rate hit 2.3% in April, less than expected and lowest since 2021
https://www.cnbc.com/2025/05/13/cpi-inflation-april-2025.html
 

Yeah, the price of eggs may be down, but they are still too expensive. They are simply down from a ridiculously high price. About 6 weeks ago, my son paid $13 for a dozen organic, cage free eggs. I caved and got a dozen from Amazon Fresh for $4.99, about $2 more than I had been paying. Lets not get too excited about price reductions just yet. There is still uncertainty about where this is all going to land.
 
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I see that, but 6 weeks ago? It's a little like saying that "things were bad before they got better, thus they are still bad." :ROFLMAO:

Keep in mind that "the inflation rate" measures how much higher prices are getting, i.e. a rate of increase not an amount. To actually see prices go down over the long term requires negative inflation (deflation) to wipe out the previous period of high inflation. Deflation is recognized as bad news for an economy.

But I was just glad to see some good news for a change.
 

Checking online here gas is $3.40/gallon and eggs around $4/dozen. Not especially low, but they've been holding for a while now.
 
groceries alone are up 20-30% since 2020 .

gas is down because the chaos has fears of a recession looming .

watch how low it goes if we have a great depression scenario.

eggs are a supply chain issue correcting . inflation is primarily a monetary issue .

supply chain issues are caused by weather , disease , labor issues , strikes , political issues and usually only effect certain products

There are two schools of thought regarding inflation:
  • “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” -- Milton Friedman, 1976 Nobel Prize in Economics winner. That is, expanding the money supply too quickly causes inflation.
  • “Persistent high inflation is always and everywhere a fiscal phenomenon, in which the central bank is a monetary accomplice." -- Thomas Sargent, 2011 Nobel Prize in Economics winner. That is, too much persistent federal government spending causes persistent inflation.

According to the Fiscal Theory of the Price Level (FTPL), inflation is primarily caused by fiscal policy rather than monetary policy. According to this theory:
  • Inflation occurs when government debt is larger than what people think the government will repay through future budget surpluses.
  • The real (that is, inflation-adjusted) value of government debt, which declines with inflation, is equal to the present value of expected future fiscal surpluses.
none of that pertains to bird flu killing chickens
 
Egg farmers keep their chickens piled up in small cages, they cut off their beaks without anesthesia to keep them from pecking each other to death from the stress. They shred millions of live male chicks to death. The females lay overly large eggs in great pain.

Save money and misery, don't buy eggs.
tourkyPoults-EBAA-6.jpg
 
We are seeing some food prices going down. Eggs are just under $4 a dozen for regular eggs, and gasoline is $2.49 at places like Costco and Sam’s Club, and a little higher at other stations.
Coffee seems to be holding the same price, even though I remember reading that it was a bad harvest this year and that prices were expected to go up. So, pretty much, all of the things that we buy for groceries are the same, or a little cheaper.
 
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the cpi isn’t anyone’s personal cost of living index .

it is only a price change index across the 1500 mini economies that make us up . many of the items you don’t buy .

to be a cost of living index it would need to reflect only your area , how many times you buy the item , the quality of the item since higher end goods tend to see bigger price increases but last longer , and how willing you are to sub items for cheaper ones .

if i can not get my no sugar klondikes on sale i will buy jello instead as an example .

so no one’s actual cost of living is represented
 
mathjak107 said:
so no one’s actual cost of living is represented
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What yardstick do you suggest instead? Everyone was happy to cite CPI when it appeared to justify alarmism.

Housing is a separate matter, and has been trending out of control for some time. Car prices rose much higher in the past few years than recently.

What would need to change in order to have a positive outlook? Have housing and cars and such ever come down more than fractionally and remained down?

Tariff negotiations are far from complete, yet already the alarmist predictions of dire consequences and recession have been significantly walked back. Will those who profit from unbalanced trade take a hit? Probably. But they lived high riding on the backs of the rest of America for far too long already. Not many will cry over their Gravy Train's end.
 
We’ve all been profiting from unbalanced trade.

We buy more than we sell simply because it’s to our advantage.

I don’t find it at all surprising that wealthy nations buy more than poor nations.

It is true that the additional money that we spend ripples through the economies of poor nations and helps to stimulate the economy but I honestly don’t see the harm in it.

The $h/t will hit the fan when the poor nations catch up and we have no where to indulge our need for inexpensive consumer goods.

The only good thing about these tariffs is that it represents a tax on those consumers that continue to buy. Hopefully our government will put that new revenue to good use and not continue its own spending problem.
 
dilettante said:
To actually see prices go down over the long term requires negative inflation (deflation) to wipe out the previous period of high inflation. Deflation is recognized as bad news for an economy.
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I'm trying to reconcile what you're presenting. In the above, you indicate lower prices are a negative, at least "over the long term," but in your OP, you wrote: "Gasoline and groceries have become more affordable, not to mention eggs in particular which have fallen quite a bit."
 
dilettante said:
Have housing and cars and such ever come down more than fractionally and remained down?
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Yes and no. My wife and I bought a house in 1980. In the coming years, the value rose steadily, but then there was a major decline in home values for several consecutive years prior to the time we sold it in 2010. We lost money because we sold the house for less than what we paid for it. In time, values again rose, but we never reaped the benefit of the turnaround.
 

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