I think you're giving too much weight to discretionary spending -- although it does seem dangerous that consumer spending is such a huge part of American economy.

In fact though, isn't it smart to buy today what will cost more tomorrow during a period of high inflation -- not that 4% is that high. (You must have seen photos of people buying food with wheelbarrows full of currency.)

Correction: I lost part of my percentage number. Not 4%; 2.4%!

The current inflation rate is 2.4%, but "prices are 23.3% more expensive today than they were before the coronavirus pandemic recession began in February 2020."

https://www.bankrate.com/banking/federal-reserve/latest-inflation-statistics/

Again, where does @arcy_gw live? It's a fact: the tariffs will cost the American consumer. Much of the increased spending in April was attributed to people stocking up before tariff implementation. I know I did! We bought a refrigerator early because of the expected increase.

Bookwoman has me wondering... Aren't prices supposed to go up over 5 years? I mean things always go up. Just how bad is inflation yet?

Mind you, we will absolutely have outrageous inflation, probably very soon. I think we're all just waiting for the other shoe to drop.

Except for arcy, who lives in la la land. 🙉

Last week, I heard a money advisor who suggested buying children's back-to-school clothes and supplies now, rather than waiting until mid-summer.

Post is still there.

Here is arcy's post:

" I am not seeing this inflation in what I buy. Much of that is fake news to give people something to crab about and make a fuss. Hate really does stoke the one side of the aisle. It's rather sad. "

People are buying now, stocking up for what they think is ahead - higher prices and supply line disruption. US had the highest trade imbalance last month since 1993. Imports affected through the new tariffs are just beginning to arrive at ports, if at all. Ship arrivals this week are down 30+% over last year. This projection extends weeks out. The impacts are really just beginning.

"If inflation is so bad, why do we keep buying things?"

We keep buying things because over the past 50 years the government has set the example that going into infinite debt is not a problem. nyuk

Corrected my post

We are not stocking up, per se. I wish I could hoard coffee, avocados….

I pick up a few pencils and Barbie dolls when I’m out.

We bought a few modest electronics months ago. Two weeks ago I picked up a good deal on very nice cotton bath towels (needed them). $8 to10 for a full plush but not slimy-plush all cotton, well-made bath towel.

Got a few slacks, jeans., needed clothing. I don’t care much for most shopping.

To me, the price of "stuff" going up is not as offensive as the price of things like the electric and water bills, insurance of ALL kinds, medications, things like that. THOSE are unavoidable to most people and its sickening how the companies absolutely ring people dry. Then we are told condescendingly to cut back on non essentials that might make us happy in order to afford them. Ugh.

" Last week, I heard a money advisor who suggested buying children's back-to-school clothes and supplies now, rather than waiting until mid-summer. "

I'm not sure this is a good suggestion.

If the interest rate on money is higher than the inflation rate or increase rate of the consumer price index, you lose money buying sooner instead of keeping the money in an interest bearing account and spending it later. It may be that normal price rate changes are N/A to consider right now because of prices spikes caused by tariffs that will be in the double digits. Maybe that was what the person had in mind?

" If enough people refuse to buy, wouldn't businesses realize that raising prices isn't working and be forced to change course? "

Businesses will be forced to change course by not offering things, or by going out of business.....Prices aren't higher because businesses all decided that it was a good time to make a higher profit; prices are higher because the businesses' costs are going up (for one reason or another). If people stopped buying TVs or lawn mowers or a new mattress, the prices won't come down until the business is ready to hold a bankruptcy sale.

The party of doom and gloom. Definately not progressives.

Anyway...retailers like Walmart and Target have indicated they are working to mitigate tariff impacts by diversifying suppliers and are sourcing from Vietnam or Thailand. So...IOW, since the imports from China are down sharply and the bookings from these other Asian countries are up, this shows us that the supply chains are shifting. That's a good thing. This puts further pressure on China. Plus, there are negotiations happening-this will be short-lived. Liven up and put a smile on your face!

I don't see anyone stockpiling around here.

Actually, I did buy three of my 1# whole coffee beans on Amazon the other day. They are normally around $25 each-and when I went to reorder, it was down to $14. I took advantage and bought three. Didn't strockpile because I was afraid they would run out though.

Actually, during the high inflation of the Carter presidency, the economy grew pretty well. People can spend during inflation. Sometimes it's the strong demand itself that leads to inflation. It is in trying to squelch that inflation with tighter monetary policy that can lead to recession and lowered demand.

" Actually, during the high inflation of the Carter presidency, the economy grew pretty well. People can spend during inflation "

No, actually, that wasn't the entire story. Interest rates and prices spiked upwards at record rates to unprecedented levels. Personal income and wages never rise as much nor as quickly or at the same time as interest rates and market prices so people were stuck facing higher prices many couldn't afford. The housing market crashed as mortgage rates went into double digits. Property couldn't be sold because potential buyers couldn't afford the significantly higher payments the rise in mortgage rates produced. Seller financing became a market necessity.

The phrase that was used at the time was "stagflation". Inflation with a stagnant economy. This along with other manifestations of this otherwise fine fellow's ineptness as the chief executive were why he wasn't reelected.

During Jimmy Carter's presidency (1977-1981), real GDP grew at an average annual rate of approximately 3.25%. That is decent economic growth and he had one short 6 mo. recession near the end of his term. The deeper longer recession came during Reagan when Volcker ratcheted up interest rates to quell inflation.

Such stats are reported after the fact and are intended to provide a degree of comparability from period to period. There are many different indexes tracked and reported. Each has particular positives and negatives that the experts who work with them are well aware of. And the general public generally isn't. They're imprecise indications only, not report cards.

If you were a working adult during those years, the market realities of stagflation would have been very apparent to you. The unavailability of mortgage loans, plummeting real estate values, retail prices rising much faster than personal income and a tightening of the job market would have been part of the economic reality you faced. Not statistics reported in the news.

These were not years of prosperity and good times, they were years of challenges and difficult economic circumstances for most Americans.

I think the problem with higher prices is because it's compounded. We didn't even get to get over what happened during COVID with the supply chain issues. Now the tariffs are going to exponentially drive things upwards.

We don't need to wait to see what the tarrifs are going to do, historically causes inflation. It's not going to fix the economy it's going to ruin the economy. We can't bring everything back to America because we don't have the infrastructure to build and make the things that are being imported. I guess I should say were being imported...

^Yes! A point seemingly overlooked is that the machinery used in manufacturing is itself mostly made overseas, IOW imported...

How many layers of wool do you have over your eyes?

The CPI inflation items used in the basket to calculate the rate of inflation has changed many times over the decades to make the inflation rate look lower. For food they use chicken, not beef and the other items are laughable, like snacks. Since 1983 they switched from house prices to rent prices and they use the price of TV's, we all know TV prices have been dropping like a rock for a few decades. Published inflation rates are worthless except for two things, to short cost of living increases for social security and fluff GDP numbers.

The actual Shadow inflation rate runs between 2 and 3 times higher then the fake published inflation rate they feed us..

The real GDP number published is adjusted for inflation using the fake inflation numbers. If they used the shadow (alternate) inflation rate that we've seen over the last 4 years to adjustment the nominal GPD number it would show we're in a sad state retraction.

Oh, and the stock market? For many companies in the stock market they've been raising prices because of inflation but many are leveraging inflation with their own inflated increases to make Revenue and earnings look good and their stock prices soar. Some call it greedflation, but if prices were to come down the companies using this tactic would see their stock prices crash hard. Lower prices are the last thing they want to see, just like the oil companies. They will resist at all costs and voting with your wallet will do absolutely nothing.

It's been said high prices are the cure for high prices, and competition is the medicine. This would tackle greeflation, but never the government generated inflation. Deflation is Kryptonite to a government with massive debt, and would collapse the county into something you only see in doomsday movies. The federal reserve would NEVER allow this to happen and the reason THEY created inflation in the first place, it's a done deal we must now live with. Tarriflation (just made this up) can be stopped over night, I'm not the least bit worried about any temporary Tarriff but I do worry about Greedflation by companies who will keep the prices in place when tariffs are removed, but competition will fix their greed in due time.

I really think you are associating what happened under Reagan with Carter. For example, "...plummeting real estate values..."

"...retail prices rising much faster than personal income..."

Moreover, a "tightening job market" is generally considered a good thing and keeps wages rising.

I think, with these tarriff issues, the US is acting like (to borrow a recent metaphor) “we hold all the cards” in this game. I don't think this is the case. This issue, as many posters have pointed out, is much more complex than ”you tariff me, I tariff you”. I’m guessing all these trade partners are developing ”Plan B, C & Ds”.

I’m hearing often that the ”market hates uncertainty”. Well, what we have here is a big bunch of it and the awareness that it can come and go on a person’s apparent whim. I believe most find this disconcerting rather than comforting, and will look for ways to minimize their exposure.

For anyone to insinuate that all people spend money "at the expense of savings" is a bit presumptuous.

I am debt-free.

"

For anyone to insinuate that all people spend money "at the expense of savings" is a bit presumptuous.

I am debt-free. "

Being debt free is great, but being debt free does not necessarily relate to having savings. People without safety savings may also be living debt free.

Well, of course that could also be true. But most people intelligent enough to be and stay debt-free are also intelligent enough to know that saving money is imperative!

Ok, I am going in here. Throw rocks.

Why Elmer do we have to prove our creds to you when you do not do the same?

The inflation in the 1970's was extra brutal thanks to opec turning the screws on America. I had just bought a new 73' van when the price of gas was 25 cents a gallon. It wasn't long after that when the price jumped up rapidly and gas lines were down the street. That extra high cost of energy helped drive up prices of almost everything else.

" Why Elmer do we have to prove our creds to you when you do not do the same? "

No one does.

If someone wants to challenge any comment, mine or any other, that's fine. What was said was incorrect and the poster keeps insisting. That's what this continuing saga is about.

I don't need to do an internet search to describe something I lived through and experienced personally and professionally. I've previously described my professional background, probably too much so. You can take what I said above as being factual, on-point and adequate for this conversation. Or not. I'm okay with your choice either way.

It's something I remember quite well. In addition to working with clients to help them under the then difficult circumstances, unforeseen circumstances I had no control over got me personally caught in what I'll call a financial riptide that cost me a fair bit of money at the time. My recollection of what was going on is quite clear and someone with apparently less personal and professional relevant experience does Google searches and posts data they don't realize to be off-topic charts as counterpoints. It's pretty funny.

Is it a macho thing for them?

I've tried to contribute what I know to the conversation. I've nothing more to add about the stagflation or economic problems that were present at the time, to rebut the mistaken notion suggesting that the late 1970s were a period of wealth growth and prosperity. It wasn't so.

For anyone to insinuate that all people spend money "at the expense of savings" is a bit presumptuous.

I am debt-free.

So am I, with the exception of a mortgage on one of my houses and that, only because at 2.5% (tax deductible no less) why pay it off. What I said was “even” at the expense of savings. Regardless of your financial status, what you spend on “stuff” is money you’re not saving. But yes, I was specifically thinking of people who might be having a hard time saving as much as they’d like, because they’re trying to maintain the standard of living they’re accustomed to. It’s hard to tell kids “sorry, this year is different, can’t buy you stuff anymore.” No idea what was presumptuous about what I said.

..."to rebut the mistaken notion suggesting that the late 1970s were a period of wealth growth and prosperity. It wasn't so."

Exactly! If he was so good, why was he a one-term President? He was definitely not known for being a good President. Compassionate, yes. He would have been a better Pope.

I'll follow food's good example and return to the thread's title...

"If inflation is so bad....... "

Please don't think there is any uncertainty. Inflation is not a good thing for a number of reasons. Here are a few...

-Inflation devours and reduces personal wealth. This is mathematical. If you've saved dollars of value and later have to spend those same dollars having less value because prices have risen, then inflation has made your money worth less. And you have less left over than if prices hadn't risen.

If you're trying to accumulate a greater net worth to use for gifts or future spending for yourself or for retirement years, price increases caused by inflation devalue just how far your savings will stretch or how long and at what level it will pay your living expenses.

-Inflation-related price increases cause uncertainty which can lead to the economy stalling or even declining. Spending plans, whether individual or business related, tend to get postponed when money devalues. In the hopes that inflation will slow to cause prices to drop. Or because of the need for more time to accumulate the money needed for paying higher than expected prices.

" Exactly! If he was so good, why was he a one-term President? "

Who said "he was so good"?

I think one of the key factors behind Carter's loss was the hostage crisis and the failed attempt to rescue them. It was not a coincidence that the hostages were released shortly after RR was sworn in.

In 1980, interest rates were at the HIGHEST levels ever seen in the US.

The non-partisan National Bureau of Economic Statistics considered the US to have undergone a mini-recession in 1980 with a 2.2% fall in GDP over a majority of the months before the important day in November. Caused by inflation and rising interest rates. This can be found in Wiki

That's why Carter wasn't reelected. Dollars and cents.

People had tired of the situation abroad, it had been going on for awhile. But the effects of and planning to deal with rising prices, interest rates, and stagflation were a daily experience

Interest rates continued to rise for another year or two to control the runaway inflation that had begun in 1979. It took some time to cool down.

The other side ended a face off before November by saying this, in part:

" Are you better off now than you were four years ago? Is it easier for you to go and buy things in the stores than it was four years ago? Is there more or less unemployment in the country than there was four years ago? "

What have former US presidents done that affected the economy positively or negatively? How does this relate directly to a president? Is this a function of the cabinet members he chooses? (Cabinet members having to be approved by Congress and all...)

Or, does the economy relate mostly to factors outside of a president's control?

Americans tend to be myopic about the world's economy. We only see us and dont consider what is happening elsewhere. Inflation is affecting everyone's economy.

If the rational behind tariffs was protective which is the normal reason countries have them now then the effect is not the same as it is when an administration tells you that we are going to be raking in money from other countries which is of course not true. We pay the tariffs. It is a form of taxation and in the early days of this country as the new government tried to figure out how to fund itself that is what they used, plus the ever popular sin tax as in tax on liquor. You have to squeeze money out of the populace that is to be governed somehow or other and we famously do not like to pay taxes.

We went ahead and replaced a freezer that had been making odd noises for a year or more because we were worried about availability like during covid.

Something also people tend to forget is that when the worth of your money has changed it is not an equivalent to the money that something cost several years ago. Comparisons that are not inflation adjusted are useless. What seems to be so much cheaper from the past could actually have cost more as a percentage of income. It is when income doesnt inflate at the same rate as money that you have trouble. Medical care and university educations cost way more than the rate of inflation for instance.

patriciae

The pump on our pond went out in March so we ordered a replacement on March 25th. Yesterday I was looking for electrical specifications on the pump at the company’s web site and noticed that the price of the same pump was now 11.4% higher. The pump is made in Germany. German goods are now subject to a 10% tarriff. Coincidence? I think not.

Good reminder about allowing for inflation.

I like to use the CPI inflation calculator tool from the bureau of Labor Statistics:

https://www.bls.gov/data/inflation_calculator.htm

And IMPE, when comparing past costs to current ones, many items are basically priced the same, while others have ballooned (like real estate)

I do wonder how much longer we'll have accurate info from them, tho...

" I like to use the CPI inflation calculator tool from the bureau of Labor Statistics: "

For what useful purpose?

I have a rental turning over May 31. The new people move in June 20. So we have 20 days to reseed the lawn(They drained their hot tub on the lawn - killed it) and buy/install a NEW hot water heater.

Just checked...the price went up $75 since I checked it 3 days ago. (and ....as interesting as that is....it's still affordable)

" Why Elmer do we have to prove our creds to you when you do not do the same? "

Where did Elmer say that? I missed that part.

Currently, Things are changing at a rapid pace. Will prices, inflation continue upwards, it may be too early to tell. Pain now for future gain? The question is, how much pain and for how long will the populace endure? Will we be better off in 4 years than now? Time will tell!

" Where did Elmer say that? I missed that part. "

It has been removed. (They did say it; I read it)

Looks to be another WIN for the master. China will charge 10% and the USA will charge 30%. just think of it as a nice little Consumption tax and your contribution to America when buying made in china. Like I said, the prices can easily reverse downward overnight, but something you'll never see ever is a reversal of the insane inflation old joe made us eat. Did you people really enjoy losing at least (and Officially) 25% of the purchasing power of your life savings between Jan 2020 and Dec 2024?

"" Where did Elmer say that? I missed that part. "

It has been removed. (They did say it; I read it)"

I deleted nothing.

Please don't refer to me as "they". I'm not gender neutral.