And yet the stock has been totally crushing it. Like a perfectly smooth chart, hardly a hiccup ever even for 2022. Walmart does well no matter what: high inflation due to strong economy means higher prices. Economic weakness means people shop at Walmart to save money.
Most Americans have never set foot in a place with a functioning small business environment, and don't realize what they have given up. In most places in Europe, the bigbox roll up never really happened. Many of those people who work at Walmart in the US are small business owners in Europe.
Yeah, well - I don't like Walmart at all, but I will say I've only been really burned by small businesses. Big box stores just take things back usually. Small businesses can't afford to take returns.
Also, generally you can't get everything you need from small shops, unfortunately.
>Walmart does well no matter what: high inflation due to strong economy means higher prices. Economic weakness means people shop at Walmart to save money.
Welcome to the consumer staples sector. You do relatively well during recessions because people have to eat, but during boom times they're not going to buy 2x more because their wallets are fatter. Your growth prospects are also heavily limited, in contrast to "growth" companies like Amazon.
All the reasons they gave are warnings we already know - fed tightening, auto delinquencies, and a declining savings rate. All general warnings but nothing specific about what they are seeing.
I wonder if all of management got new restricted share grants based on revenue growth and aiming for that
From WalMart, that's optimism. Back around 2008, the CEO of WalMart was saying that their customers were out of money. They were watching same-store sales decline through the month, to rise again after payday. They're not reporting things being that bad this time.
Wages are declining. Not the dollar amount, but the purchasing power. The fed can pretend that they are lowering inflation, but unless we have negative inflation, the damage is done. The higher prices are here to stay.
On top of that, the measures of inflation and unemployment aren’t even tracking half the thing that contribute to the health of consumer spending.
Now we’re in the opposite situation where we need inflation, price inflation lower than wage inflation. Inflation that is greater than stock index growth.
Inflation that lowers the real value of debts and amassed fortunes.
Or a good old stock market and housing crash to wipe out accumulated concentrated wealth with measures to keep employment up.
So, coming from a country with roughly 5% inflation for like 30 years or more, let me take a moment to throw some oil on troubled waters.
Sure inflation means prices go up. Equally it means wages go up. Ideally in sync, but naturally sometimes a bit less, occasionally a bit more.
Future-income streams like pensions are (mostly) always inflation linked (in direct or indirect ways.) no-one with half a brain would consider a "fixed income" approach to retirement.
The number on the sticker is just a number. It generally flows upward. Sure its bigger now than it used to be, but then again so is my wage.
(as an aside, lowering the number is deflation, and that's really bad for an economy because it encourages people to not-spend, as it'll be cheaper tomorrow. And our word "economy" can loosely be translated as "amount of spending".)
So, as long as your income is inflation adjusted you're fine. If it isn't, well, take a minute today to teach your children why they should always work for/save for/invest for inflation adjusted returns.
I generally agree. We see that with the real wage charts over the past 50 years. However, I will say that it seem the lower paid end of the wage spectrum has seen some pretty significant growth in the past 3 years. At least at my local Walmart and Lowes it went from about $10-12/hr starting to $13-15.
One step further, the problem isn't so much that wages aren't going up right now, it's that they've tended to stagnate for quite the extended period already...
and that governments and (some) big businesses / industries are basically colluding to ensure virtually none of the gains in profits are spent on wages, or social services (health, housing, etc) that would make a difference.
More-or-less, yes? Since the advancement of neoliberalism there's been a markedly increase in the wealth gap in all developed countries, the money has been concentrating at the top for the past... 40 years.
Historically, inflation was usually a function of higher labor costs, therefore wages and prices often rose together. Our current inflation is a result of external factors, so prices are skyrocketing but wages are rising much less quickly.
> Historically, inflation was usually a function of higher labor costs
That's the wage-price spiral theory of inflation, and is faulty. Inflation is always a monetary phenomenon, where the money supply increases faster than the value in the economy.
Increasing wages (without increasing productivity) does not increase the supply of money, and so the increased pay means there is less money for other purposes, which depresses prices.
As always, the Law of Supply & Demand is at work here.
>Inflation is always a monetary phenomenon, where the money supply increases faster than the value in the economy.
This feels trivial to disprove. For instance: 1973 oil shocks causes prices of oil to go to the moon. Inflation occurs, because prices are driven up by the price of oil. No money printing has occurred.
There was a lot of deficit spending (money printing) going on then. The proof that oil shocks don't cause inflation is simple - when the oil prices come back down, there is no corresponding deflation.
How are you defining inflation such that it's not dependent on the price of goods? If it is dependent on the price of goods then obviously the price of oil going up produces inflation, since the price goes up without any change to the fuel itself.
Inflation is a general price increase. Increasing the price of one commodity does not increase the money supply which is necessary for a general price increase.
Why would that be necessary? Increases in the price of fuel (or a variety of other things) impact the price of just about everything else, so why would that not qualify as a general price increase? Beyond that, the price of one commodity going up _does_ change the general price of things if you're using an average.
I mean if you want to redefine inflation to simply be "how much the money supply has increased" then be my guest, but if that doesn't actually translate to how much more things cost then I don't see how useful that measure is. For the past year the money supply has been trending downward, so are you suggesting we didn't have any inflation last year?
> so why would that not qualify as a general price increase?
Because, unless there is a corresponding increase in the supply of money, the money spent on the oil isn't available to spend on other things. So those other things will experience a decline in prices, due to the inevitable Law of Supply & Demand.
Ah, but perhaps oil is a necessary component to manufacture many different things, so those other products will be forced to increase in lroce as well despite reduced demand.
I'm confused why you're ignoring the whole "supply" part of supply and demand. If companies can't afford to ship as much product, what happens to the supply? If businesses go bankrupt and disappear, what happens to the supply?
I think there's a lot of caveats to the money supply argument, but even just from a pure supply/demand application you can have inflation if there's less goods to go around, without any change in money supply. That's also exactly what happens when you have situations such as increases in shipping costs and it becomes more expensive for businesses to operate.
Again, did we inflation last year despite the money supply decreasing?
I already said, higher wages or labor costs result in higher prices. But the other half of that spiral -- that higher prices are the cause of increased labor costs -- is not something I claimed.
Yes that’s how it should work, but that’s not how it works in reality. The obvious problem is that the wages haven’t gone up meaningfully. However, a bigger problem is that the “inflation” does not reflect the reality.
For 20 years since 2000, the inflation has on an average been around 2%, a few times peaking at 3%. However if you look at some of the biggest expenses a household has: housing, healthcare, education etc., the inflation has been a lot higher.
>However if you look at some of the biggest expenses a household has: housing, healthcare, education etc., the inflation has been a lot higher.
Inflation (ie. the headline number you see) is already weighted to account for this. Claiming that inflation "does not reflect the reality" because a few of the basket items are growing in price faster than the weighted average doesn't really make much sense. You'd expect 50% of the items (by weight) to be growing faster than the index by definition.
Also, even though housing grew faster than inflation, it's not by much[1]
Inflation is how the government raises taxes without raising taxes.
1. Even if wages kept pace with inflation (and they often don't), the wage increases happen after the fact. They're at least a year behind.
2. The government defines how inflation is calculated. It's in the government's best interests to have the calculated figure be as low as they can get away with. The actual rate of inflation is likely considerably more than the official rate.
3. Inflation pushes you into a higher tax bracket. Not everything is indexed to inflation.
4. Inflation causes illusory capital "gains", and is taxed.
5. Anyone holding bonds that pays a fixed interest rate gets a haircut.
6. Most people, including the WSJ, neglect to adjust figures for inflation.
>The actual rate of inflation is likely considerably more than the official rate.
Source? I don't mean linking to some site like shadowstats[1] that only claim the BLS is laying and publishes their own numbers without elaboration. I mean some sort of study that actually tries to gather price data in a methodical way (ie. no "here's my grocery receipts from 2020 compared to today"), presents them, and shows how the BLS data is inconsistent with reality. The BLS provides inflation data at a pretty high granularity[1], so you don't even have to replicate all of BLS's efforts to debunk them.
>6. Most people, including the WSJ, neglect to adjust figures for inflation.
What does this even mean? Are you claiming that they never adjust for inflation? I find that hard to believe. On the other hand, expecting that they always account for inflation is a pretty high bar. As it stands right now, the most charitable interpretation is that you're claiming they adjust for inflation at anywhere between 1% and 99% of the time and you think that's not high enough, which doesn't say much.
They'll compare a price in one year with a price in another year and fail to discount the difference by inflation.
> Are you claiming that they never adjust for inflation?
Sigh. If you find it necessary to add adjectives, you've created a strawman. For example, if I say "humans have two legs" and you respond with "not all humans have two legs" that is a strawman.
>Sigh. If you find it necessary to add adjectives, you've created a strawman. For example, if I say "humans have two legs" and you respond with "not all humans have two legs" that is a strawman.
I specifically have a non-strawman version in the following sentences. I wonder how you missed that?
> They'll compare a price in one year with a price in another year and fail to discount the difference by inflation.
I'm not sure whether this is a subtle attempt at claiming that the BLS underestimates inflation by a half, or you actually think BLS's methodology actually involves adjusting for inflation twice.
People often talk past each other about inflation because many people are concerned solely with the rising costs of the things they need to live, in real terms. Housing, food, healthcare, education, transportation, insurance. It is trivial to look up the real dollar costs of what these things cost decades ago, and what they cost now. It is also very trivial to look up what wages were, in real dollars, and compare the rates of increase between costs and wages. In every category of the things that people actually need to survive, real inflation is massively, massively higher than wage growth. It is obvious nonsense to insist inflation was only 6.4% last year when the people you're trying to convince are well aware of that their grocery bill is 50% higher, their health insurance premiums have doubled, rent has substantively increased and they still owe $60,000 in college debt on tuition that people with part time jobs were paying for a few decades ago. BLS can talk about how the roll of toilet paper that costs $2 this year instead of $1 last year is actually "cheaper" because the value is better due to their hedonic adjustment, but at the end of the day I'm paying twice as much for tp.
Which gives a very misleading figure. The useful figure is "total employee compensation" which includes the value of benefits such as vacation, sick days, health insurance, 401k contributions, etc. All of this can add another 40% to the wages.
>The useful figure is "total employee compensation" which includes the value of benefits such as vacation, sick days, health insurance, 401k contributions, etc. All of this can add another 40% to the wages.
No, actually that figure is not useful at all, and is one of the primary tools used by BLS and others to obfuscate and mislead about actual wages. Your employer and BLS may "value" your health insurance at $10,000 a year compensation. However, if you have a $5,000 deductible and cannot afford to pay for medical care out of pocket that "compensation" is worthless to you. Food costs actual dollars. Rent cost actual dollars. Gas costs actual dollars. The only thing that matters is the dollars you actually take in to pay for these things you need to survive, not some imaginary compensation number the government or your employer declares your actually salary was. When your rent in actual dollars, and the cost of food doubles in actual dollars, and the price of gas triples in actual dollars, nothing matters less than the BLS declaration that your compensation went up $10,000 because the health insurance your job offers you (that you can't afford to use because of the massive deductible) is now worth $20,000 instead of the $10,000 they said it was worth last year.
>People often talk past each other about inflation because many people are concerned solely with the rising costs of the things they need to live, in real terms. Housing, food, healthcare, education, transportation, insurance.
The categories you listed adds up to almost 3/4 of the total CPI basket.
> It is trivial to look up the real dollar costs of what these things cost decades ago, and what they cost now. It is also very trivial to look up what wages were, in real dollars, and compare the rates of increase between costs and wages.
It's evidently not trivial, otherwise anyone with a spreadsheet would have been able to debunk BLS's stats in a matter of hours. Instead, the state of the art when it comes to inflation skepticism seems to be "add an arbitrary number to BLS's inflation number, and don't bother justifying anything".
> BLS can talk about how the roll of toilet paper that costs $2 this year instead of $1 last year is actually "cheaper" because the value is better due to their hedonic adjustment, but at the end of the day I'm paying twice as much for tp.
Only certain categories are subject to hedonic adjustments, and toilet paper isn't one of them[2].
In America almost no one has pensions anymore. If you're lucky you have some money in a 401k or similar account that's gambling on the stock market always going up. Nothing in retirement accounts is resistant to inflation.
Wages aren't going up as fast as price increases, plain and simple. People are facing something like a 40% increase in rent, groceries, etc. over the last couple years. No one is getting 20-40% raises (not without a major career change or advancement, and that doesn't scale to everyone).
For the most part the stock market goes up, and part of this rise is caused by inflation. If the market overheats then there's a correction, but the long term trend is steadily upwards. Thus the stock market is a good hedge against inflation, but should be balanced with cash to guard against short-term fluctuations.
There are certainly products and markets where supply does not meet demand. Housing in some local areas (SF etc) can be climbing steeply, whereas in other areas its flat or declining. This is not inflation. This is market-driven-economy.
That fits in with the government wanting to downplay inflation. That alone should make you suspicious of such theories.
> it encourages people to not-spend, as it'll be cheaper tomorrow. And our word "economy" can loosely be translated as "amount of spending".)
Economies are not driven by spending. They are driven by the creation of value. Being driven by creating money and spending it implies one is getting something for nothing, which is a giant red flag for a mistake in reasoning.
The creation of value is derived from consumption of that value, no? If something is created and has value then someone will be a consumer of such, increasing spending. If something of value is created and no one consumes that it's an oxymoron.
Creation of value only exists through spending. If money is more valuable later I will hold onto my money for longer instead of spending, velocity of money goes down, less money being traded hands mean more people are less willing to part with their money to invest in some value-creation as that's riskier than holding onto cash that will be more valuable in the future. Rinse and repeat.
Sure, you created value, for whom? In the case there's no spending: if it's for you and immediate neighbours there's a limit to that value, you can just feed so many carrots to people, over that threshold you are just creating waste, not value. You can donate them but that requires transportation and incurs costs, someone has to take those costs, which will cause spending.
So it's tied to spending, if you can't sell carrots then what value do you have for the rotting ones you can't eat?
That is fundamentally spending. He is spending his time to get your value.
In practice we can basically ignore this from "economy" calculations though. While it happens, it's such a tiny part of the economy as to be irrelevant.
Equally growing carrots in itself requires spending. Certainly your time, but also input costs with fuel, fertiliser, water and so on.
Of course it is possible to live "off grid" and be totally, or mostly, self sufficient. Effectively to live "outside the economy". Again, while this happens, it's vanishingly rare (and those folks don't care about inflation)
That's not how it works in America. The real purchasing power, adjusted for inflation and costs of living, of the middle and lower has been falling for decades. There is a massive increase in income at the top. Also, look at CEO to worker pay ratios. Americans, if not moderately-to-very rich, don't know how bad they have it compared to the rest of the modern world.
I agree. American employers have failed to raise wages and American workers have accepted this as OK. That's not the fault of inflation its the fault of a passive workforce.
Contrast to France where workers are organised, and motivated, and the slightest sign of pain leads to rioting.
While it's easy to "blame inflation" for the decline in real wages, that's not the root cause of the problem. Of course every employer keeps talking about inflation as the cause - it deflects from the real cause.
Absolutely. There are tens/hundreds of millions of aspiring American billionaires who believe hard work for peanuts or a lottery ticket are their salvation.
If American workers had any sense and self-respect, they would capture more of the value they create by forming worker-owned co-ops rather than give their blood, sweat, and tears over to investors (those who own capital and wealth) of publicly-traded companies.
Lone wolf, self-absorbed, rugged-individualism doesn't scale well beyond about 1 person. The prevailing lack of both community and solidarity in the US are sources of major social and economic failure. Many Americans believe less regulation, fewer laws, and greed magically result in wealth flowing from the heavens.
The reason is that in both the global financial crisis and COVID we printed loads of money the rich kept it, effectively stealing from the poor to give to the wealthy. Of course printing in the UK ~£1.1tn will cause inflation and the poor will probably vote for fascism next time around. But at least asset prices continue to rise!
Yes, but that generally shouldn't mean reduced sales in nominal amounts but rather inflation adjusted amounts.
Notably, the 'low end' retail outlets tend to boon in rough times. TJMaxx is doing just fine.
What Walmart is signalling is not good... but if the Dollar Store is signalling down sales it's really bad.
If the Dollar Store is signalling up sales, during a downturn, but Walmart is signalling down, that might actually mean Walmart is becoming a bit more middle class than we might want to think. Which is a whole other story.
Note Dollar Tree does seem to be moving consistently forward [1] so this very well might be a shift in spending from Walmart to truly discount places. A quick check for ALDI USA sales (if you can find them) might fill in the blanks of this story.
Whatever the reason, this is not a good sign for the US economy. In a growing country, more people should be able to shop on more upscale stores compared to the past. In the US people are now moving to lower and lower scale stores, initially to WallMart and now to dollar stores. It tells that the US consumer is now moving to the lower spectrum of purchasing power.
First, Western economies are cyclical, this is a low-point, so we have to kind of average over time, and we have to account for 'surpluses'.
'Walmart' standard of living is basically magnificent for anyone living in 1980 for example. Almost 'upper class'.
It's unthinkable the quality, quantity and amazing expression of goods, selection that you can get in Walmart now, compared to 'average shopper' in 1980.
Fish, lobster, sushi, vast array of breads, fruits out of season, innumerable array of packaged foods, toys and sports equipment as far as they eye can see, clothing that costs as much as a coffee. etc. and technologies that we could not have dreamed of.
I'm not saying there isn't a problem, I'm just pointing out two areas, the later of which is generally overlooked.
I wonder if people are spending because they feel desperate or are having a kind of PTSD reaction to the pandemic. The money they got from the government has run out, credit card debt is reaching record highs once again, yet people keep spending. Maybe they still feel traumatized and are spending to make themselves feel better with new stuff. Maybe they just got used to overriding their budgets when certain types of spending seemed essential during the pandemic (storing more groceries meant fewer exposures for example). If so, raising interest rates is going to have zero effect on this kind of spending, though running out of credit could bring it to a halt (and likely trigger new problems). People keep saying there is a growing mental health crisis and maybe this is part of it.
>Real average hourly earnings decreased 1.8 percent, seasonally adjusted, from January 2022 to January
2023. The change in real average hourly earnings combined with an increase of 0.3 percent in the
average workweek resulted in a 1.5-percent decrease in real average weekly earnings over this period.
So the real hourly rate is 12% higher than it was in 2012. Is that a correct reading of the chart? That seems not great because rent and food feel like they have doubled.
85 comments
[ 3.7 ms ] story [ 149 ms ] threadAnd yet the stock has been totally crushing it. Like a perfectly smooth chart, hardly a hiccup ever even for 2022. Walmart does well no matter what: high inflation due to strong economy means higher prices. Economic weakness means people shop at Walmart to save money.
Also, generally you can't get everything you need from small shops, unfortunately.
https://en.wikipedia.org/wiki/Something_Wall-Mart_This_Way_C...
Welcome to the consumer staples sector. You do relatively well during recessions because people have to eat, but during boom times they're not going to buy 2x more because their wallets are fatter. Your growth prospects are also heavily limited, in contrast to "growth" companies like Amazon.
I wonder if all of management got new restricted share grants based on revenue growth and aiming for that
On top of that, the measures of inflation and unemployment aren’t even tracking half the thing that contribute to the health of consumer spending.
Inflation that lowers the real value of debts and amassed fortunes.
Or a good old stock market and housing crash to wipe out accumulated concentrated wealth with measures to keep employment up.
Sure inflation means prices go up. Equally it means wages go up. Ideally in sync, but naturally sometimes a bit less, occasionally a bit more.
Future-income streams like pensions are (mostly) always inflation linked (in direct or indirect ways.) no-one with half a brain would consider a "fixed income" approach to retirement.
The number on the sticker is just a number. It generally flows upward. Sure its bigger now than it used to be, but then again so is my wage.
(as an aside, lowering the number is deflation, and that's really bad for an economy because it encourages people to not-spend, as it'll be cheaper tomorrow. And our word "economy" can loosely be translated as "amount of spending".)
So, as long as your income is inflation adjusted you're fine. If it isn't, well, take a minute today to teach your children why they should always work for/save for/invest for inflation adjusted returns.
and that governments and (some) big businesses / industries are basically colluding to ensure virtually none of the gains in profits are spent on wages, or social services (health, housing, etc) that would make a difference.
That's quite astounding! I'm in Australia, I'd hazard a guess we've got a very analogous scenario here.
That's the wage-price spiral theory of inflation, and is faulty. Inflation is always a monetary phenomenon, where the money supply increases faster than the value in the economy.
Increasing wages (without increasing productivity) does not increase the supply of money, and so the increased pay means there is less money for other purposes, which depresses prices.
As always, the Law of Supply & Demand is at work here.
This feels trivial to disprove. For instance: 1973 oil shocks causes prices of oil to go to the moon. Inflation occurs, because prices are driven up by the price of oil. No money printing has occurred.
I mean if you want to redefine inflation to simply be "how much the money supply has increased" then be my guest, but if that doesn't actually translate to how much more things cost then I don't see how useful that measure is. For the past year the money supply has been trending downward, so are you suggesting we didn't have any inflation last year?
Because, unless there is a corresponding increase in the supply of money, the money spent on the oil isn't available to spend on other things. So those other things will experience a decline in prices, due to the inevitable Law of Supply & Demand.
I think there's a lot of caveats to the money supply argument, but even just from a pure supply/demand application you can have inflation if there's less goods to go around, without any change in money supply. That's also exactly what happens when you have situations such as increases in shipping costs and it becomes more expensive for businesses to operate.
Again, did we inflation last year despite the money supply decreasing?
No, it's not. Wage-price spiral assumes two-way causation: that higher wages cause higher prices, AND that higher prices lead to higher wages.
For 20 years since 2000, the inflation has on an average been around 2%, a few times peaking at 3%. However if you look at some of the biggest expenses a household has: housing, healthcare, education etc., the inflation has been a lot higher.
Inflation (ie. the headline number you see) is already weighted to account for this. Claiming that inflation "does not reflect the reality" because a few of the basket items are growing in price faster than the weighted average doesn't really make much sense. You'd expect 50% of the items (by weight) to be growing faster than the index by definition.
Also, even though housing grew faster than inflation, it's not by much[1]
[1] https://www.aei.org/wp-content/uploads/2020/01/cpi2020-875x1...
1. Even if wages kept pace with inflation (and they often don't), the wage increases happen after the fact. They're at least a year behind.
2. The government defines how inflation is calculated. It's in the government's best interests to have the calculated figure be as low as they can get away with. The actual rate of inflation is likely considerably more than the official rate.
3. Inflation pushes you into a higher tax bracket. Not everything is indexed to inflation.
4. Inflation causes illusory capital "gains", and is taxed.
5. Anyone holding bonds that pays a fixed interest rate gets a haircut.
6. Most people, including the WSJ, neglect to adjust figures for inflation.
Source? I don't mean linking to some site like shadowstats[1] that only claim the BLS is laying and publishes their own numbers without elaboration. I mean some sort of study that actually tries to gather price data in a methodical way (ie. no "here's my grocery receipts from 2020 compared to today"), presents them, and shows how the BLS data is inconsistent with reality. The BLS provides inflation data at a pretty high granularity[1], so you don't even have to replicate all of BLS's efforts to debunk them.
[1] https://www.bls.gov/news.release/cpi.t04.htm
>6. Most people, including the WSJ, neglect to adjust figures for inflation.
What does this even mean? Are you claiming that they never adjust for inflation? I find that hard to believe. On the other hand, expecting that they always account for inflation is a pretty high bar. As it stands right now, the most charitable interpretation is that you're claiming they adjust for inflation at anywhere between 1% and 99% of the time and you think that's not high enough, which doesn't say much.
> Are you claiming that they never adjust for inflation?
Sigh. If you find it necessary to add adjectives, you've created a strawman. For example, if I say "humans have two legs" and you respond with "not all humans have two legs" that is a strawman.
I specifically have a non-strawman version in the following sentences. I wonder how you missed that?
> They'll compare a price in one year with a price in another year and fail to discount the difference by inflation.
I'm not sure whether this is a subtle attempt at claiming that the BLS underestimates inflation by a half, or you actually think BLS's methodology actually involves adjusting for inflation twice.
I'm interested in friendly debate, not rhetorical games nor exchanging hostile posts.
Which gives a very misleading figure. The useful figure is "total employee compensation" which includes the value of benefits such as vacation, sick days, health insurance, 401k contributions, etc. All of this can add another 40% to the wages.
No, actually that figure is not useful at all, and is one of the primary tools used by BLS and others to obfuscate and mislead about actual wages. Your employer and BLS may "value" your health insurance at $10,000 a year compensation. However, if you have a $5,000 deductible and cannot afford to pay for medical care out of pocket that "compensation" is worthless to you. Food costs actual dollars. Rent cost actual dollars. Gas costs actual dollars. The only thing that matters is the dollars you actually take in to pay for these things you need to survive, not some imaginary compensation number the government or your employer declares your actually salary was. When your rent in actual dollars, and the cost of food doubles in actual dollars, and the price of gas triples in actual dollars, nothing matters less than the BLS declaration that your compensation went up $10,000 because the health insurance your job offers you (that you can't afford to use because of the massive deductible) is now worth $20,000 instead of the $10,000 they said it was worth last year.
The categories you listed adds up to almost 3/4 of the total CPI basket.
> It is trivial to look up the real dollar costs of what these things cost decades ago, and what they cost now. It is also very trivial to look up what wages were, in real dollars, and compare the rates of increase between costs and wages.
It's evidently not trivial, otherwise anyone with a spreadsheet would have been able to debunk BLS's stats in a matter of hours. Instead, the state of the art when it comes to inflation skepticism seems to be "add an arbitrary number to BLS's inflation number, and don't bother justifying anything".
> BLS can talk about how the roll of toilet paper that costs $2 this year instead of $1 last year is actually "cheaper" because the value is better due to their hedonic adjustment, but at the end of the day I'm paying twice as much for tp.
Only certain categories are subject to hedonic adjustments, and toilet paper isn't one of them[2].
[1] https://en.wikipedia.org/wiki/Shadowstats.com
[2] https://www.bls.gov/cpi/quality-adjustment/
Wages aren't going up as fast as price increases, plain and simple. People are facing something like a 40% increase in rent, groceries, etc. over the last couple years. No one is getting 20-40% raises (not without a major career change or advancement, and that doesn't scale to everyone).
There are certainly products and markets where supply does not meet demand. Housing in some local areas (SF etc) can be climbing steeply, whereas in other areas its flat or declining. This is not inflation. This is market-driven-economy.
That fits in with the government wanting to downplay inflation. That alone should make you suspicious of such theories.
> it encourages people to not-spend, as it'll be cheaper tomorrow. And our word "economy" can loosely be translated as "amount of spending".)
Economies are not driven by spending. They are driven by the creation of value. Being driven by creating money and spending it implies one is getting something for nothing, which is a giant red flag for a mistake in reasoning.
Creation of value only exists through spending. If money is more valuable later I will hold onto my money for longer instead of spending, velocity of money goes down, less money being traded hands mean more people are less willing to part with their money to invest in some value-creation as that's riskier than holding onto cash that will be more valuable in the future. Rinse and repeat.
Nope. If I grow carrots, I create value. No spending required.
So it's tied to spending, if you can't sell carrots then what value do you have for the rotting ones you can't eat?
Value does not exist in a vacuum.
In practice we can basically ignore this from "economy" calculations though. While it happens, it's such a tiny part of the economy as to be irrelevant.
Equally growing carrots in itself requires spending. Certainly your time, but also input costs with fuel, fertiliser, water and so on.
Of course it is possible to live "off grid" and be totally, or mostly, self sufficient. Effectively to live "outside the economy". Again, while this happens, it's vanishingly rare (and those folks don't care about inflation)
Now you're shifting meanings of "spending".
what if self funded from extensive savings, which generate dividends, and of which enough exists for decades of fixed income?
But your point is fair, if i have plenty of cash saved I can live on that capital till I die, for some definition of "plenty".
https://www.epi.org/publication/charting-wage-stagnation
Contrast to France where workers are organised, and motivated, and the slightest sign of pain leads to rioting.
While it's easy to "blame inflation" for the decline in real wages, that's not the root cause of the problem. Of course every employer keeps talking about inflation as the cause - it deflects from the real cause.
If American workers had any sense and self-respect, they would capture more of the value they create by forming worker-owned co-ops rather than give their blood, sweat, and tears over to investors (those who own capital and wealth) of publicly-traded companies.
Lone wolf, self-absorbed, rugged-individualism doesn't scale well beyond about 1 person. The prevailing lack of both community and solidarity in the US are sources of major social and economic failure. Many Americans believe less regulation, fewer laws, and greed magically result in wealth flowing from the heavens.
Also, wages and inflation are very highly coupled. Wages are a key component of prices.
Specifically, from all the service workers that were laid off during the pandemic because pandemic related shutdowns (eg. restaurants, resorts)
Notably, the 'low end' retail outlets tend to boon in rough times. TJMaxx is doing just fine.
What Walmart is signalling is not good... but if the Dollar Store is signalling down sales it's really bad.
If the Dollar Store is signalling up sales, during a downturn, but Walmart is signalling down, that might actually mean Walmart is becoming a bit more middle class than we might want to think. Which is a whole other story.
Note Dollar Tree does seem to be moving consistently forward [1] so this very well might be a shift in spending from Walmart to truly discount places. A quick check for ALDI USA sales (if you can find them) might fill in the blanks of this story.
[1] https://www.macrotrends.net/stocks/charts/DLTR/dollar-tree/r...
'Walmart' standard of living is basically magnificent for anyone living in 1980 for example. Almost 'upper class'.
It's unthinkable the quality, quantity and amazing expression of goods, selection that you can get in Walmart now, compared to 'average shopper' in 1980.
Fish, lobster, sushi, vast array of breads, fruits out of season, innumerable array of packaged foods, toys and sports equipment as far as they eye can see, clothing that costs as much as a coffee. etc. and technologies that we could not have dreamed of.
I'm not saying there isn't a problem, I'm just pointing out two areas, the later of which is generally overlooked.
Total wealth is being wildly redistributed to just a handful of people.
I don't see how the average US citizen can afford to raise a family.
I've seen janitors sleeping in their cars because they can't afford rent.
https://www.bls.gov/news.release/realer.nr0.htm
>Real average hourly earnings decreased 1.8 percent, seasonally adjusted, from January 2022 to January 2023. The change in real average hourly earnings combined with an increase of 0.3 percent in the average workweek resulted in a 1.5-percent decrease in real average weekly earnings over this period.
People are working more and making less.
https://fred.stlouisfed.org/series/COMPRNFB
They haven't.
https://fred.stlouisfed.org/series/CPIUFDSL
https://fred.stlouisfed.org/series/CUSR0000SAS2RS