May 3rd, 2023
This week in Ryan’s Weekly Wave: Inflation is higher than politicians say, so-called ‘digital nomads’ are here to stay, and most of the news media makes us hate each other.
Politicians and talking heads continue to claim that inflation is coming “down.” At best, this is “politician speak” for the apparent end of an upward trend of rising inflation. Another way to explain this would be to say that the politicians are doing what they do best – lying for political gain.
Perhaps all this news of “waning” inflation was the source of my confusion when I analyze my recent grocery bills. By any reasonable assessment, the overall pain felt by low-income earners and the working class has been dramatically understated.
Despite the stated attention of policy makers at the Federal Reserve and within the US government, inflation has outpaced wage growth for quite a long time now. This trend is only just now starting to reverse. Let’s hope it continues.
More about this below in the Deep Dive Section.
In the News
Rampant Inflation: Fact Check… Inflation is easing, but it is not “going down.” (Forbes)
- There continue to be promising signs, with decreasing rates of increases.
- The 5% year-over-year increase in March was the lowest rate since May of 2021. (Statista)
- There is Less Consumer Spending yet inflation still remains stubbornly hot. (Reuters)
Fuel for Hope: Wage growth has lagged behind inflation until just about now! (Statista)
Make Money, Live Here: There are a few US cities where $300,000 feels like $100,000. (Bloomberg)
Other News
Work from Everywhere: Digital Nomads are here to stay. (Forbes)
- A San Francisco building was valued at $300 million just 4 years ago. Now it may sell for 80% less than it was once worth. (Wall Street Journal)
- San Francisco has some of the lowest in-person office worker attendance rates in the world. (The Real Deal)
Trend Setters: An HR expert believes that executive pay cuts might be here to stay as a way to control costs. (HR Brew)
Disney Moves Forward: Disney plans to focus on profitability after their recent announcement of layoffs. (Yahoo Finance)
A Deeper Dive – The Real Inflation Rate
Many politicians and news providers suggest that inflation is “coming down.” There is just one problem. It is not. This is a lie and it should be revealed as such. Despite the dishonesty, as the two major political parties begin posturing ahead of the 2024 elections, this unfortunate and ethically tone-deaf talking point continues to gain steam among the political class.
A new breakdown of the overall rate of inflation since 2021 reveals just how much damage has been done to working-class US households. For example, if it feels like you have been robbed while visiting the grocery store lately, there is a legitimate reason. You are not crazy.
And the pain extends much further than the popularly reported price increase of eggs. (CBS News) There is more for working folks to contend with than just pricey eggs. To say the least.
The Truth is Here
In reality, inflation has not been anywhere near its Federal Reserve target rate of 2% since heightened inflation became our new way of life in 2021.
The 2% target rate is guided by the US Consumer Price Index (CPI). This measure aggregates price data on goods and services across the economy. Contrary to popular belief, this index does not exclude food and energy prices (many erroneously claim that it does not), however it does exclude housing costs (more on that in a moment). The index does take into consideration the cost of rent.(Bureau of Labor Statistics)
The CPI and other conventional, broad-scale economic measurements do undoubtedly understate price increases in certain sectors. (CNBC) Inflation does not fit neatly into one number. It is instead distributed unequally throughout the economy.
Here are a few statistics that reveal the true extent of the inflation problems from April of 2021 to January 2023. If your wages have outpaced these outrageous price hikes, congratulations!
*Please write to me so I can learn about your secret and spread the word to others. Don’t be greedy.
- Overall CPI inflation is 13% higher now than in the Spring of 2021.
- Groceries and the cost of preparing food at home has risen 20%.
- Electricity is up 21% and gas is up 22%.
- Certain travel expenses are up massively with airfare at 36% and hotels up 31%.
- New cars cost 19% more and repairs have risen by a similar amount.
There are a few pieces of good news scattered within this analysis. Televisions have decreased in price by 17% and computers have decreased by 4%. Vehicle rentals have also leveled off from what were originally massive spikes with an overall increase of only 1%.
A Crushing Force
As inflation continues to increase at decreasing rates, the crisis will hopefully end soon (we can only hope). In the worst cases, households are turning to credit cards to pay for basic expenses. (NBC News) In other cases, the inflation is crushing dreams of home ownership.
One striking statistic on how inflation has affected homeownership comes from an analysis of just how much housing costs have risen in the past several decades. Since 1970, inflation in housing has risen at 150% of the CPI inflation rate. (Anytime Estimate)
According to this same source, If inflation in the housing market were to mirror the CPI for this time period, the average home would cost about $177,788 today. Instead, the median price of a home is currently a ridiculous $408,100 and let’s not get started on how much it costs to rent.
In sum, if you were wondering why you have no money left to spend on anything, including the things you need, that would be because inflation is still persistently and ridiculously high. On certain key items, inflation is dozens of percentage points higher than it is made out to be.
As usual, our politicians are lying.
What I’m Reading
Hate, Inc.: Why Today’s Media Makes Us Despise One Another
– Matt Taibbi
Social media has confused modern humans. The incentives of organizations who report on news has changed dramatically over the years and consumers have not adjusted yet. Taibbi references legendary broadcaster Walter Kronkite’s popular send off, “and that’s the way it is… have a good night.”
If you are younger, this might sound arrogant and off-putting. However, Taibbi makes an interesting point about how this messaging encouraged viewers to disconnect from the news and return to their day-to-day lives.
He expands upon this point elsewhere in the book, “we have representative democracy precisely so we can let other people do our vitriolic arguing for us.” Taibbi shows how basically all of popular news outlets have recently abandoned basic journalistic principles in favor of click-baiting partisanship.
Taibbi writes, “if anything we’re addicting people to conflict, vitriol, and feelings of superiority.” He goes on. “It works. Companies know, fear and mistrust are even harder habits to break than smoking.”
If you are a consumer of the news media, you have been warned. Now go get this book to learn more! It will make you a much more discerning consumer of news media.
Quote of the Week
“Everything should be as simple as possible, but no simpler.”
– Albert Einstein
Articles of the Week
Forget what everyone says, have microaggressions… of gratitude. (Dig to Fly)
The mind routinely plays tricks on us but we can sidestep our negativity traps. (Alex Mathers – Medium)
Sleep your way to the top! (Money Mini Blog)
Instead of mastering bad habits, choose these good habits instead of watching Netflix and drinking wine. (Aleid ter Weel – Medium)
New From Deep Dive Careers: Making the Brand: How to Advance Your Career in a Remote Work Environment
- Remote workers suffer a disadvantage when the time comes to promote someone. If you are in such an environment and desire to advance in your career, you had better adjust your approach to overcome this barrier.
Other Fun Stuff
Here is a handy calculator to estimate your after-tax take home pay in various US cities. (SmartAsset)
Here are the most notable things about each European country (according to ChatGPT). (Simon Kuestenmacher – via Twitter)
Dad Joke of the Week
Dada says:
Q: What did one eye say to the other eye?
A: Between you and me, something smells.
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