Inbound container volumes to the US are reverting to pre-pandemic levels(freightwaves.com)
freightwaves.com
Inbound container volumes to the US are reverting to pre-pandemic levels
https://www.freightwaves.com/news/us-import-demand-drops-off-a-cliff
294 comments
I think there is an argument for semi-onshoring, aka not quite getting it to the US but reducing supply chain risk: Mexico for low cost labor with low value-added and near zero supply chain risk (if it's a maquiladora on the border), Colombia for low cost with high value added but slightly higher supply chain risk.
> there is an argument for semi-onshoring, aka not quite getting it to the US but reducing supply chain risk
"Friend shoring" [1].
[1] https://www.bloomberg.com/news/articles/2021-06-24/-onshorin...
"Friend shoring" [1].
[1] https://www.bloomberg.com/news/articles/2021-06-24/-onshorin...
Perhaps what would be interesting would be to enable some sort of reverse special economic zone just within the US border such that the corporations would be in US jurisdiction but the employees could flow through with minimal overhead - with some sort of fast pass checkpoint. A separate more tightly controlled border checkpoint could then happen as you move further into the US.
For what purpose ?
Mexico already has the “maquiladora” model were raw materials flow tariff free into the factory in Mexico, get assembled / transformed there, and go back across the border to the US duty free
https://en.m.wikipedia.org/wiki/Maquiladora
Mexico already has the “maquiladora” model were raw materials flow tariff free into the factory in Mexico, get assembled / transformed there, and go back across the border to the US duty free
https://en.m.wikipedia.org/wiki/Maquiladora
So exploit workers by bringing them from overseas, and treat them differently to the local laws?
You’ve just described Qatar, Bahrain, UAE etc.
Maybe reconsider why local labour is expensive and why it’s worth paying for.
You’ve just described Qatar, Bahrain, UAE etc.
Maybe reconsider why local labour is expensive and why it’s worth paying for.
> So exploit workers by bringing them from overseas, and treat them differently to the local laws?
OP said they would be "in US jurisdiction," and thus, presumably, subject to American labor laws. What I think they were suggesting was a visa-free zone within the U.S., which is an interesting idea.
OP said they would be "in US jurisdiction," and thus, presumably, subject to American labor laws. What I think they were suggesting was a visa-free zone within the U.S., which is an interesting idea.
Hmmm I didn’t get that impression from this;
> corporations would be in US jurisdiction but the employees could flow through with minimal overhead
It implies to me that the corporations get to be US based and reap those benefits while employees are not and can be taken advantage of.
Though I do agree with you - there’s a few experiments happening with special economic areas / designated cities in a few places (again, a few in the Middle East) to attract talented individuals and companies to whom local laws may not apply.
> corporations would be in US jurisdiction but the employees could flow through with minimal overhead
It implies to me that the corporations get to be US based and reap those benefits while employees are not and can be taken advantage of.
Though I do agree with you - there’s a few experiments happening with special economic areas / designated cities in a few places (again, a few in the Middle East) to attract talented individuals and companies to whom local laws may not apply.
Your initial impression is probably an indicator of why it could probably not happen politically - it sounds off. But speaking pragmatically - the US population demographics is aging versus Mexico's still growing working age population. Just any hint of US on-shoring/supply chain/pandemic has led to US wage and consumer goods inflation.
Assuming its highly regulated with US minimum wage laws - a SEZ would be much more about arbitraging the strong US dollar/US High Cost of Living (which is strong due to the US's Tech/Finance/Trade strength leaving US manufacturer stuck) versus the more moderate Mexican peso/lower cost of living.
An employee from Mexico working at US factory would be living quite well if they could freely go back after work to living south of the border.[1]
I'd also mention the realistic alternatives to this are: - just import finished goods from other developing countries produced under highly unknown labor or - locate the factory fully within the US and have the undocumented employees cross the border illegally and live in precarious, unmonitored conditions hundreds of miles away from their families and exacerbating housing issues.
[1] Apartment in Matamorosa Mexico is $400 versus $1020 in McAllen, Texas
Assuming its highly regulated with US minimum wage laws - a SEZ would be much more about arbitraging the strong US dollar/US High Cost of Living (which is strong due to the US's Tech/Finance/Trade strength leaving US manufacturer stuck) versus the more moderate Mexican peso/lower cost of living.
An employee from Mexico working at US factory would be living quite well if they could freely go back after work to living south of the border.[1]
I'd also mention the realistic alternatives to this are: - just import finished goods from other developing countries produced under highly unknown labor or - locate the factory fully within the US and have the undocumented employees cross the border illegally and live in precarious, unmonitored conditions hundreds of miles away from their families and exacerbating housing issues.
[1] Apartment in Matamorosa Mexico is $400 versus $1020 in McAllen, Texas
How is that any worse than exploiting Chinese workers, funding the CCP, and wasting time and resources to ship goods halfway across the world?
We need to stop being so hung up on ethics that we fail to arrest our civilization's descent.
We need to stop being so hung up on ethics that we fail to arrest our civilization's descent.
It isn't - we should be (and a lot of larger corps are) encouraging higher standards for workers in those places, and it is significantly better compared to a decade ago. Not to mention as those workers demand better wages and conditions, it suddenly starts to make economic sense to hire locally.
We should not be taking steps backwards and making that sort of behaviour acceptable, because if we do that at home - then places with already lower standards will compete by lowering theirs further.
We should not be taking steps backwards and making that sort of behaviour acceptable, because if we do that at home - then places with already lower standards will compete by lowering theirs further.
The US also has to take antitrust seriously so that there aren’t single points of failure at a corporate level.
Geographically it’s a huge country so really would benefit from having factories scattered around the country/NAFTAland. Even if some of them clustered in a preferential region (lumber in Canada, car parts in Mexico, certain foodstuff is in California) it offers some risk.
Remember when a fire in a single factory in Japan crippled the semiconductor industry world wide a few years ago?
Geographically it’s a huge country so really would benefit from having factories scattered around the country/NAFTAland. Even if some of them clustered in a preferential region (lumber in Canada, car parts in Mexico, certain foodstuff is in California) it offers some risk.
Remember when a fire in a single factory in Japan crippled the semiconductor industry world wide a few years ago?
Canada would like to talk to you about car parts and being a preferential region for that as well (Ontario, think Windsor i.e. right across from Detroit - not that Detroit's car manufacturing is going strong or anything like that but still).
Growing food in California should be re-thought if you ask me, given the prolonged drought conditions. At some point shipping water to California just doesn't make sense any longer. Instead of shipping the water to California, grow the food where the water is, even if the yields aren't as high. Like you said, a single crop failure in California can wipe out near 100% of the US' food production for certain fruits and vegetables or at least a very very sizable portion of it.
Growing food in California should be re-thought if you ask me, given the prolonged drought conditions. At some point shipping water to California just doesn't make sense any longer. Instead of shipping the water to California, grow the food where the water is, even if the yields aren't as high. Like you said, a single crop failure in California can wipe out near 100% of the US' food production for certain fruits and vegetables or at least a very very sizable portion of it.
No one is shipping water to California. The water for California agriculture is diverted from its natural flow, yes, but it comes from mountains located on the east side of California.
On the far side of these mountains you will find the humid wetlands and the wide rivers of ... Nevada. Perhaps you can try kayaking on Groom Lake someday.
On the far side of these mountains you will find the humid wetlands and the wide rivers of ... Nevada. Perhaps you can try kayaking on Groom Lake someday.
Is Mexico really a zero supply chain risk?
I don't know much about the cartels or violence in Mexico, but that's the first thing I think of when you describe Mexico as low risk.
I don't know much about the cartels or violence in Mexico, but that's the first thing I think of when you describe Mexico as low risk.
I think their parenthetical about a maquiladora on the border was the hedge on Mexico as zero supply chain risk.
There is increased cartel risk. I follow a former White House geopolitical analyst after I met him at a conference. Here's his latest talk on Mexico: https://www.youtube.com/watch?v=yilSJg5CMd4
There is increased cartel risk. I follow a former White House geopolitical analyst after I met him at a conference. Here's his latest talk on Mexico: https://www.youtube.com/watch?v=yilSJg5CMd4
This guy speaks with a great deal of confidence. I love listening to him talk, but the claims he make are breathtaking and he seems to make them without a second thought. For that reason I was curious to see what sort of predictions he's made in the past and see how accurate he has been.
Well, maybe not quite as powerful at predictions as he is at making geopolitical claims.
(He made a bunch of claims in 2009, for the coming decade I'll paraphrase and link to his predictions)
He claimed the middle eastern wars would be withdrawn from and the world would see it as American weakness. That appears to be incorrect from any metric I can find.
He claimed chinas economy would collapse within the decade in 2009. Well, that's not anywhere approaching corret.
He claimed Germany in the same timeframe would ascend to late 1930 levels of political power. I'm not sure how to quantify that, but I sincerely doubt anyone looks at Germany as strongly as they looked in late 1930s.
He predicted Russia would push their western front, but I'm not so sure that was a bold prediction given the russia-georgia war, but he's definitely correct here.
Made a soft prediction of an eastern asia conflict due to Japans collapsing demographics, not correct, but not a strong prediction either.
Concluded by saying we're going to invert into a deflationary economy, which also appears to be very wrong.
I don't know nearly enough to call the guy out by any means, but I do take his word with a lot of hesitancy. I can't think of anyone who speaks as boldly and confidently across such a large domain without feeling the need to evidence their claims.
https://www.businessinsider.com/stratfor-predictions-for-the...
Well, maybe not quite as powerful at predictions as he is at making geopolitical claims.
(He made a bunch of claims in 2009, for the coming decade I'll paraphrase and link to his predictions)
He claimed the middle eastern wars would be withdrawn from and the world would see it as American weakness. That appears to be incorrect from any metric I can find.
He claimed chinas economy would collapse within the decade in 2009. Well, that's not anywhere approaching corret.
He claimed Germany in the same timeframe would ascend to late 1930 levels of political power. I'm not sure how to quantify that, but I sincerely doubt anyone looks at Germany as strongly as they looked in late 1930s.
He predicted Russia would push their western front, but I'm not so sure that was a bold prediction given the russia-georgia war, but he's definitely correct here.
Made a soft prediction of an eastern asia conflict due to Japans collapsing demographics, not correct, but not a strong prediction either.
Concluded by saying we're going to invert into a deflationary economy, which also appears to be very wrong.
I don't know nearly enough to call the guy out by any means, but I do take his word with a lot of hesitancy. I can't think of anyone who speaks as boldly and confidently across such a large domain without feeling the need to evidence their claims.
https://www.businessinsider.com/stratfor-predictions-for-the...
> He claimed Germany in the same timeframe would ascend to late 1930 levels of political power. I'm not sure how to quantify that, but I sincerely doubt anyone looks at Germany as strongly as they looked in late 1930s.
Agreed literally, but post-Ukraine Germany has made an historical shift, for the first time since WWII, to invest seriously in their military and support foreign militaries, and before that, during the Trump administration, they gained much influence and stature as arguably the world leader on human rights.
> He claimed the middle eastern wars would be withdrawn from and the world would see it as American weakness. That appears to be incorrect from any metric I can find.
That actually has been US policy under Obama, Trump and Biden: Trump tried to withdraw from everywhere. Under the Democratic Presidents, the policy has been that the US is less dependent on Middle Eastern oil, the Middle East is consuming not-unlimited US geopolitical power (including military power), and we need to shift geopolitical resources to China while deepening our relationship with NATO.
Obama withdrew from Iraq, made a deal with Iran, and instead of supporting the Saudis he tried to balance them and Iran; he also began the shift of geopolitical resources, including military, to China. Trump withdrew from Iraq and Syria, and undermined various other relationships. Biden pulled out of Afganistan (Middle East adjacent, bordering Iran), explicitly stating the the reasons above (China, etc.) and is shifting more resources to China, and has clearly defined them as 'the pacing threat'.
And many have claimed, including after the two Iraq/Syria pullouts and the Afghan pullout, that America is weaker.
Agreed literally, but post-Ukraine Germany has made an historical shift, for the first time since WWII, to invest seriously in their military and support foreign militaries, and before that, during the Trump administration, they gained much influence and stature as arguably the world leader on human rights.
> He claimed the middle eastern wars would be withdrawn from and the world would see it as American weakness. That appears to be incorrect from any metric I can find.
That actually has been US policy under Obama, Trump and Biden: Trump tried to withdraw from everywhere. Under the Democratic Presidents, the policy has been that the US is less dependent on Middle Eastern oil, the Middle East is consuming not-unlimited US geopolitical power (including military power), and we need to shift geopolitical resources to China while deepening our relationship with NATO.
Obama withdrew from Iraq, made a deal with Iran, and instead of supporting the Saudis he tried to balance them and Iran; he also began the shift of geopolitical resources, including military, to China. Trump withdrew from Iraq and Syria, and undermined various other relationships. Biden pulled out of Afganistan (Middle East adjacent, bordering Iran), explicitly stating the the reasons above (China, etc.) and is shifting more resources to China, and has clearly defined them as 'the pacing threat'.
And many have claimed, including after the two Iraq/Syria pullouts and the Afghan pullout, that America is weaker.
We have not withdrawn from the middle-east - troops increased during trumps era substantially and obama era created new war fronts. We've redeployed troops to somolia this year (technically not middle east, but I think most people associate it with those wars), iraq combat didn't stop until last year, so while technically not within the decade of his predictions, close enough. We're still killing noteworthy figures in syria. I don't consider this an accurate prediction given it was made in 2009 and had a decade window. I think 99% of people would've made the same prediction and have been surprised by todays middle east involvement if they could've seen into the future.
I don't have my thumb on the global pulse of American strength perception so I really can't comment there, but my perception is that people do not perceive America as anything approaching weak with their military.
I don't have my thumb on the global pulse of American strength perception so I really can't comment there, but my perception is that people do not perceive America as anything approaching weak with their military.
A lot of these are all or nothing arguments. Yes, the US didn't withdraw completely, fighting in Iraq didn't stop completely, but that isn't meaningful. There were substantial reductions, and policy dictates more.
Also, statistics and drawing dividing lines on Oval Office changes isn't as meaningful as it appears. First, policy takes months or years to develop, and then it's implemented, and then we see the consequences for years or decades after; no president affects policy much on their first day. Second, it needs to be evaluated in context: Obama withdrew combat forces substantially from Iraq, which IIRC was a campaign promise, and then ISIL grew and became a threat and Obama had to deal with them, sending forces back but in a limited fashion - leaving almost all ground combat to the Iraqi and Kurdish militaries. Trump IIRC sent more forces to finish off ISIL and then pulled almost everyone out (causing the resignation in protest of the Secretary of Defense and of the top diplomat for the region). There's a clear message that the US wants to withdraw, which tells Middle East states that the US won't be as much of a force and tells Russia and China that there is room for them to move in.
> people do not perceive America as anything approaching weak with their military
We are talking about America's overall geopolitical power, which depends on far more than the military - 99% of the world isn't fighting a war. The point isn't that the military lacks firepower, but geopolical power is perceived to be lacking - especially the political will and unity to use that power. For example, Russia and China use the Afgan pullout extensively in propaganda, telling people in places like Taiwan that the US wouldn't defend them. The support for Ukraine has changed that substantially, however.
Also, statistics and drawing dividing lines on Oval Office changes isn't as meaningful as it appears. First, policy takes months or years to develop, and then it's implemented, and then we see the consequences for years or decades after; no president affects policy much on their first day. Second, it needs to be evaluated in context: Obama withdrew combat forces substantially from Iraq, which IIRC was a campaign promise, and then ISIL grew and became a threat and Obama had to deal with them, sending forces back but in a limited fashion - leaving almost all ground combat to the Iraqi and Kurdish militaries. Trump IIRC sent more forces to finish off ISIL and then pulled almost everyone out (causing the resignation in protest of the Secretary of Defense and of the top diplomat for the region). There's a clear message that the US wants to withdraw, which tells Middle East states that the US won't be as much of a force and tells Russia and China that there is room for them to move in.
> people do not perceive America as anything approaching weak with their military
We are talking about America's overall geopolitical power, which depends on far more than the military - 99% of the world isn't fighting a war. The point isn't that the military lacks firepower, but geopolical power is perceived to be lacking - especially the political will and unity to use that power. For example, Russia and China use the Afgan pullout extensively in propaganda, telling people in places like Taiwan that the US wouldn't defend them. The support for Ukraine has changed that substantially, however.
It's unquestionable that violent crime in Mexico has gone up over the past several years, but the question is: does that represent a supply chain risk? I don't have the data, but it doesn't seem like cartels or violent criminals typically target civilian manufacturing infrastructure.
Mexico has a lot of manufacturing already, and a relatively healthy demographic distribution (that is, unlike the US and some other developed countries, they actually have enough young folks to replace the old folks leaving the workforce). I feel like Mexico would have to try very hard to fail at being a manufacturing powerhouse in North America.
As an aside, this is a good reason for the US to really strengthen its relationship with Mexico and try to help Mexico fix its problems; the US is probably going to be even more dependent on Mexican manufacturing in the future when this whole supply chain shuffle shakes out.
Mexico has a lot of manufacturing already, and a relatively healthy demographic distribution (that is, unlike the US and some other developed countries, they actually have enough young folks to replace the old folks leaving the workforce). I feel like Mexico would have to try very hard to fail at being a manufacturing powerhouse in North America.
As an aside, this is a good reason for the US to really strengthen its relationship with Mexico and try to help Mexico fix its problems; the US is probably going to be even more dependent on Mexican manufacturing in the future when this whole supply chain shuffle shakes out.
The cartels generally don't wanna destroy the factories. They wanna tax them.
>try to help Mexico fix its problems
Do you mean like returning the former Defense Minister to Mexico before trial? It's so nice that we can "help".
[0]https://www.cbsnews.com/news/salvador-cienfuegos-zepeda-dism...
Do you mean like returning the former Defense Minister to Mexico before trial? It's so nice that we can "help".
[0]https://www.cbsnews.com/news/salvador-cienfuegos-zepeda-dism...
Cartels are bad, but they really want to do more business rather than less, import more into the US. More ordinary trade there is, easier it is also to smuggle drugs I would guess.
They are zero risk in that they are completely within our sphere of influence. Canada and Mexico are as zero risk as you can get from an american perspective.
As a Canadian I agree with you on Canada but im a little skeptical about Mexico.
Again, im no expert on Mexico but from my understanding of the cartel situation Mexico isn't even in the sphere of influence of Mexico.
I don't thing the US would want to put critical supply chains Ina country like Mexico unless they're willing to put troops there to eliminate the cartels, which to be honest would be a terrible idea.
Again, im no expert on Mexico but from my understanding of the cartel situation Mexico isn't even in the sphere of influence of Mexico.
I don't thing the US would want to put critical supply chains Ina country like Mexico unless they're willing to put troops there to eliminate the cartels, which to be honest would be a terrible idea.
If we saw increased off-shoring to Colombia would it possibly finally result in a continuous Freight rail line through Central America? It's always struck me as exceedingly odd that Panama is the terminus for all land-borne transportation.
> It's always struck me as exceedingly odd that Panama is the terminus for all land-borne transportation.
Might be because there's this chunk of Panama/north Columbia that's run by Guerillas and is one of the most dangerous places in existence (https://en.wikipedia.org/wiki/Dari%C3%A9n_Gap)
Might be because there's this chunk of Panama/north Columbia that's run by Guerillas and is one of the most dangerous places in existence (https://en.wikipedia.org/wiki/Dari%C3%A9n_Gap)
There's this whole massive project that bombs the Darrien Gap with sterilized screwflies to prevent them from getting into North America[1]. I suspect opening that route to vehicles would probably help get them past the gap and into North America where they'd wreak havoc on livestock.
[1] https://www.nationalgeographic.com/animals/article/north-ame...
[1] https://www.nationalgeographic.com/animals/article/north-ame...
Not just that, you have some of the highest concentrations of sea shipping lanes in the world competing nearby, with rugged landscape, earthquakes, and multiple socipolitical barriers along the route.
Sounds like they need some freedom.
What an immediately cynical, hilarious and eventually thought provoking response.
I suspect it violates HN guidelines (too snarky?!?!). However, I for one applaud it's pith!
I suspect it violates HN guidelines (too snarky?!?!). However, I for one applaud it's pith!
There has also been concern that a land-based link would hamper the containment of foot-and-mouth disease that was eradicated from North America, and there are environmental concerns. Colombia proposed building a road through the whole gap:
https://www.latimes.com/archives/la-xpm-1995-08-20-mn-36988-...
But this has been heavily protested by environmentalists and natives alike. It might be less controversial to go northeast to Acandí by tunneling under the mountains, which would leave almost all of the forest untouched. Then you could build a long bridge, a coastal highway, or just keep using the ferry.
https://www.latimes.com/archives/la-xpm-1995-08-20-mn-36988-...
But this has been heavily protested by environmentalists and natives alike. It might be less controversial to go northeast to Acandí by tunneling under the mountains, which would leave almost all of the forest untouched. Then you could build a long bridge, a coastal highway, or just keep using the ferry.
Nobody seems to have figured out how to make bridging the Darién Gap cost effective. https://en.wikipedia.org/wiki/Dari%C3%A9n_Gap#By_land
Plus, there's not even any rail line reaching Panama. The southern terminus of the North American rail infrastructure is Mexico, I think. I doubt trucking everything through Central America would be very cost effective. So you're not only building a new line through 66 miles of some of the most difficult and remote terrain in the world, you're building or refurbishing another ~1500+ miles of rail.
And then you're only reaching Columbia and Venezuela, with the Andes and the Amazon between you and the two biggest markets in South America: Brazil and Argentina.
It would be cool if it happened, but I think it would have to be a regional public works project funded primarily by the U.S. government. Unless Musk is looking for his next challenge (and he can make it pencil out with his Fermi-math voodoo). Maybe the U.S. can sell it to taxpayers as a jobs and economic development program to stem the tide of Central American refugees.
Plus, there's not even any rail line reaching Panama. The southern terminus of the North American rail infrastructure is Mexico, I think. I doubt trucking everything through Central America would be very cost effective. So you're not only building a new line through 66 miles of some of the most difficult and remote terrain in the world, you're building or refurbishing another ~1500+ miles of rail.
And then you're only reaching Columbia and Venezuela, with the Andes and the Amazon between you and the two biggest markets in South America: Brazil and Argentina.
It would be cool if it happened, but I think it would have to be a regional public works project funded primarily by the U.S. government. Unless Musk is looking for his next challenge (and he can make it pencil out with his Fermi-math voodoo). Maybe the U.S. can sell it to taxpayers as a jobs and economic development program to stem the tide of Central American refugees.
I flew across the Darien gap twice in the last week and the area has always interested me for the very subject of why don’t they join south and north. Simply, there’s no cost effective way.
The landscape is wet. You would effectively be building a bridge the whole way. Whilst fighting a guerrilla war, disease and ruining an ecological system in the process.
The landscape is wet. You would effectively be building a bridge the whole way. Whilst fighting a guerrilla war, disease and ruining an ecological system in the process.
Who needs rail when there's massive port capacity in Cartagena and Panama?
Such a rail freight line would have to compete with comparatively-inexpensive sea freight, and probably couldn't do so cost-effectively.
[deleted]
The Darien Gap is insufficiently friendly to construction to permit that.
> Panama is the terminus for all land-borne transportation.
Does the Panamerican highway not qualify as land-borne transportation?
Does the Panamerican highway not qualify as land-borne transportation?
I don’t believe one can travel across the Americas via the Panamerican highway. It’s more idea than reality.
You absolutely can, except for a good chunk in the middle of the highway in the Darien gap.
Auto manufacturers are already doing this.
https://tax.thomsonreuters.com/blog/mexico-as-a-new-capital-...
https://tax.thomsonreuters.com/blog/mexico-as-a-new-capital-...
Or just basically anywhere but "always in China"
We are at systemic risk from our reliance on China.
We are at systemic risk from our reliance on China.
> freight was becoming 50-100% or more of total landed cost
How can freight be more than 100% of total cost? Everything else was zero or negative?
How can freight be more than 100% of total cost? Everything else was zero or negative?
Maybe just sloppy language, but OP might have meant “50-100% or more of the cost of producing the good itself”.
Yes, you're right, I meant as a percent of the FOB price of the product. So 100% of the FOB price would be 50% of the landed cost. 100% of landed cost doesn't make sense and was the wrong term.
‘Landed’ means total cost for producing and getting into country.
A $4 item costs $4 to ship, making it $8 to get it on shore.
That’s $8 landed so that freight is 50%.
I assume they meant percentage of the cost excluding shipping. Probably shouldn't have said 'landed' but I do know of some goods that cost over 100% of BOM to ship.
Both globalization and deglobalization can become fashionable herd mentalities. As long as the populist isolationists can be held at bay in the US and most of Europe, a sane balance should return.
If what you say is true/correct than it stands to reason removing the tariffs, would just make this issue even worse for US manufacturers and drive us into an even deeper recession?
A smart move would be tostart ratcheting up tariffs. Given the amount of international capacity, the bullwhip effect should be bluntable via tariffs.
If the bullwhip effect obeyed predictable timing, companies would already be compensating for it. If you have a secret formula that can predict when it will hit, don't bother trying to convince the polity to do something about it - become a billionaire by buying ahead of the shortages and fix the problem yourself.
Lots of companies are predicting a crash in the near future. Companies are in pure profit taking mode and inventory imbalances are growing and the situation is becoming less stable by the day. China shutting down entire towns for weeks at a time is contributing to the problem. It's a big problem for a highly connected economy, if you have way too much of parts A, B, C, and E, but none of part D you are in the worst position. Not only are you making no widgets, but you are also paying to warehouse all of your excess of the extra parts. An entirely predictable result of over-consolidation of numerous industries.
> Lots of companies are predicting a crash in the near future.
Note that when a person/company/whatever believes this, they tend to take steps that improve that entity's position, but slightly destabilizes the system as a whole. So if enough entities believe that a crash is coming, it can become a self-fulfilling prophecy.
Note that when a person/company/whatever believes this, they tend to take steps that improve that entity's position, but slightly destabilizes the system as a whole. So if enough entities believe that a crash is coming, it can become a self-fulfilling prophecy.
Is there a scenario where predicting a crash and taking action anticipating one can lead to a reduced crash or none at all?
Pandemics are like that, if the bulk of the community anticipates a pandemic threat, and takes steps to reduce their exposure/infection risk, it can change the environmental factors enough to make the pandemic fizzle out. It's one of those situations where if everybody's acting like its a big deal, it becomes a less big deal.
Fire safety is another example.
Yes. It’d look like raising rates in 2016 slightly. But it’s not a certainty that would have been enough. There are lots of market concentrating powers at play leading to inefficiencies and waste.
The one where conservative investment and slower growth are part of the culture, maybe?
[deleted]
no only paying the warehouse, but also you'll soon be on the hook to pay for part A, B, C and E even though you have no way to sell the widget you were supposed to build with them. And if you're really lucky, those stored parts might be either perishable or quickly deprecating due to technological changes.
Wag the dog - don't like these raises everyone is asking for so let's start a rumor about a recession...
Crack that whip!
https://en.wikipedia.org/wiki/Beer_distribution_game#:~:text....
https://www.youtube.com/watch?v=j_QLzthSkfM
https://en.wikipedia.org/wiki/Beer_distribution_game#:~:text....
https://www.youtube.com/watch?v=j_QLzthSkfM
Since we’re talking beer, a Simpsons whip reference: https://youtu.be/5teVixi8XLU
I've been playing an interesting game as of late where about a dozen players participate in a goods-trading economy. The economy is small, and money values, though they can of course be fractionalized to the hundredths digit, are also generally small (each player tends to start with about 200).
It's interesting to observe, over and over again, how an economy that size will just seize if only one or two players become someone whom everyone wants something from but they want for nothing. Money just pools in their coffers and since they never spend it, it's just gone from the economy. Eventually, people struggle to conduct basic transactions because the amount any individual is holding dips too close to the minimum fractionalization threshold, nobody can afford anything in the market place (except, of course, the one or two players who never spend), and what trade happens happens on a per-unit bartering basis (massively inconvenient given players in different timezones) or not at all.
... fortunately, global-scale economies are far more immune to this effect; with millions more players, millions more categories of good, and far more currency in cycle, such a seizing is basically impossible.
... unless the disparity between median holdings and maximum holdings is proportionately similar to that 200-a-person economy and the few who have all the money can't (or won't) spend it fast enough to keep it in circulation, perhaps...
It's interesting to observe, over and over again, how an economy that size will just seize if only one or two players become someone whom everyone wants something from but they want for nothing. Money just pools in their coffers and since they never spend it, it's just gone from the economy. Eventually, people struggle to conduct basic transactions because the amount any individual is holding dips too close to the minimum fractionalization threshold, nobody can afford anything in the market place (except, of course, the one or two players who never spend), and what trade happens happens on a per-unit bartering basis (massively inconvenient given players in different timezones) or not at all.
... fortunately, global-scale economies are far more immune to this effect; with millions more players, millions more categories of good, and far more currency in cycle, such a seizing is basically impossible.
... unless the disparity between median holdings and maximum holdings is proportionately similar to that 200-a-person economy and the few who have all the money can't (or won't) spend it fast enough to keep it in circulation, perhaps...
I have read that the "Opium wars" in China were a result of European annoyance that China didn't want to buy anything from them. In order to prevent the scenario you describe, Europeans tried to ship them opium, and then when China tried to ban it, they went to war.
One (of many) disproofs of the "international trade makes war less likely" theory.
One (of many) disproofs of the "international trade makes war less likely" theory.
Target recently announced that they are now overstocked. Automakers are saying the chip drought is almost over. Lumber prices are going down. Seems like we are returning to normal?
Target being overstocked is, I think, more a symptom of consumers changing demand in response to inflation. The days of free COVID money are over, and now everything costs more, so people are buying different things.
Target is in the position of needing to offer discounts- perhaps painful ones- to clear out inventory that isn't selling, while they have to pay more to bring in what is.
Time will tell, but I'm not optimistic on this account.
Target is in the position of needing to offer discounts- perhaps painful ones- to clear out inventory that isn't selling, while they have to pay more to bring in what is.
Time will tell, but I'm not optimistic on this account.
ie. inflation slows? why wouldn't i be optimistic about that?
The post I responded to used target being overstocked as a sign of things returning to normal.
Presumably, this was asb opposed to shortages; Target being overstocked is not normal, and is in fact a sign that things are not normal- rather, a sign that supply lines still aren't lining up with demand, but with different causes now than last year.
Odds are we won't see 2020 prices again on many goods, so inflation slowing is the best we can hope for (and better than rising inflation, of course). It is going to take awhile for a new normal to stabilize, though.
Presumably, this was asb opposed to shortages; Target being overstocked is not normal, and is in fact a sign that things are not normal- rather, a sign that supply lines still aren't lining up with demand, but with different causes now than last year.
Odds are we won't see 2020 prices again on many goods, so inflation slowing is the best we can hope for (and better than rising inflation, of course). It is going to take awhile for a new normal to stabilize, though.
Well, let me preface by saying this is speculation from poor understanding, but I think it's about the difference between inflation slowing because the economy has slowed and the economy slowing because inflation is high. The latter is essentially the stagflation scenario, and it's not clear to me what caused that to last so long during the 70's.
If you owe money, or if you are one of the people who were getting raises (Service and low-skill jobs across America), and were thus causing inflation in prices.
8% inflation may not sound great to you if you got a 1% raise last year, but it's pretty fantastic if you got a 15% raise.
8% inflation may not sound great to you if you got a 1% raise last year, but it's pretty fantastic if you got a 15% raise.
I think your parent post means "not optimistic [about Target's financial situation]".
The claim was never "Target's financials are going to go great," it was about return to normalcy.
> The claim was never "Target's financials are going to go great," it was about return to normalcy.
I guess I don't quite understand what is happening in this conversation :)
From my perspective, OP explained why the outlook is negative for target and you asked "why wouldn't i [whimsicalism] be optimistic about [lower inflation]?". To which the answer is, "well, you aren't target... you can be optimistic about that, that's prefectly ok, but it's also sort of immaterial to OP's post which was about Target's current situation."
OP wasn't analyzing whimsicalism's financial situation; they were analyze Target's financial situation. It's possible that you should be optimistic and target should be pessimistic.
I'm either wildly misinterpreting the flow of ideas here or your responses just don't make any sense at all. I'm not sure which.
I guess I don't quite understand what is happening in this conversation :)
From my perspective, OP explained why the outlook is negative for target and you asked "why wouldn't i [whimsicalism] be optimistic about [lower inflation]?". To which the answer is, "well, you aren't target... you can be optimistic about that, that's prefectly ok, but it's also sort of immaterial to OP's post which was about Target's current situation."
OP wasn't analyzing whimsicalism's financial situation; they were analyze Target's financial situation. It's possible that you should be optimistic and target should be pessimistic.
I'm either wildly misinterpreting the flow of ideas here or your responses just don't make any sense at all. I'm not sure which.
The original post was arguing "Seems like we are returning to normal." The response about not being so optimistic, to me, reads like a commentary on that claim.
But companies lowering prices because they are not having as much trouble acquiring goods would seem to be a return to normal to me.
But companies lowering prices because they are not having as much trouble acquiring goods would seem to be a return to normal to me.
> But companies lowering prices because they are not having as much trouble acquiring goods would seem to be a return to normal to me.
That isn't what is happening. Target is offering discounts because people aren't buying what they have in stock, not because their supply costs are going down. If anything, it'll force prices to stay high on other goods as they need to make up the losses elsewhere.
To whit [1]:
"Target set off alarms three weeks ago — its shares tumbled more than 25 percent — after reporting a 52 percent drop in first-quarter net profit. The Minneapolis-based company cited supply-chain pressures and rising expenses, factors that also hurt Walmart and helped spark a broader market sell-off that erased more than 1,100 points from the Dow Jones industrial average.
Target now expects to sell fewer products in its home categories. It continues to see strong sales in high-frequency goods like groceries, household essentials and beauty products, largely reflecting consumer trends away from the U.S. shopping boom at the height of the pandemic. It also revised its second-quarter profit expectations from 5.3 percent to 2 percent, according to a Tuesday news release."
[1]: https://www.washingtonpost.com/business/2022/06/07/target-pr...
Other articles elsewhere have also pointed out the discounts are an effort to purge stale inventory, which lines up with them also cancelling orders from their suppliers.
If they were cutting costs because supply issues were smoothing out, that would be great. Like I said in a sibling comment, it's going to take some time yet before things stabilize to a "new normal".
That isn't what is happening. Target is offering discounts because people aren't buying what they have in stock, not because their supply costs are going down. If anything, it'll force prices to stay high on other goods as they need to make up the losses elsewhere.
To whit [1]:
"Target set off alarms three weeks ago — its shares tumbled more than 25 percent — after reporting a 52 percent drop in first-quarter net profit. The Minneapolis-based company cited supply-chain pressures and rising expenses, factors that also hurt Walmart and helped spark a broader market sell-off that erased more than 1,100 points from the Dow Jones industrial average.
Target now expects to sell fewer products in its home categories. It continues to see strong sales in high-frequency goods like groceries, household essentials and beauty products, largely reflecting consumer trends away from the U.S. shopping boom at the height of the pandemic. It also revised its second-quarter profit expectations from 5.3 percent to 2 percent, according to a Tuesday news release."
[1]: https://www.washingtonpost.com/business/2022/06/07/target-pr...
Other articles elsewhere have also pointed out the discounts are an effort to purge stale inventory, which lines up with them also cancelling orders from their suppliers.
If they were cutting costs because supply issues were smoothing out, that would be great. Like I said in a sibling comment, it's going to take some time yet before things stabilize to a "new normal".
Demand lessening and firms lowering prices is exactly how inflation lessens. Not sure what else to say.
They're not cutting prices across the board. They're cutting prices on specific stock they have a glut of that their consumers can't afford anymore.
Inflation is measured across a wide range of goods- a one-time discount on select items isn't going to budge the needle, or a sign of improvement.
Inflation is measured across a wide range of goods- a one-time discount on select items isn't going to budge the needle, or a sign of improvement.
The solution to high prices is high prices.
> "free COVID money"
What in god's green earth are you talking about?
What in god's green earth are you talking about?
The "economic impact payments" in the US, clearly
Those were for business owners exclusively. I don't think the average consumer got anymore than a onetime rent relief.
Perhaps you're thinking of the payroll loans.
There were three economic impact payments that went out to almost everyone:
https://home.treasury.gov/policy-issues/coronavirus/assistan...
For people under the income caps, the total disbursed to each adult was 3200, plus additional to parents / guardians for each child.
There were three economic impact payments that went out to almost everyone:
https://home.treasury.gov/policy-issues/coronavirus/assistan...
For people under the income caps, the total disbursed to each adult was 3200, plus additional to parents / guardians for each child.
Which was a one time payment early in the pandemic.
So, 2 years on to announce that "Free COVID money is over" is extraordinarily disingenuous.
So, 2 years on to announce that "Free COVID money is over" is extraordinarily disingenuous.
Straight from supply crunch to recession.
Well, yeah, there's an intentional effort right now to crush demand because folks realized supply chains don't normalize in two financial quarters (see: "transitory").
All of COVID seems like a case of impatience.
The fact that the pandemic would last years was kind of obvious by late spring 2020 -- when in the history of humanity have humans ever experienced a pandemic that didn't last for years/decades? (I'm not here to debate masks or whatever public health measures; that's entirely tangential to the point that pandemics don't just go away after a few months.) Pandemics do end. Just not in a few financial quarters.
The same thing is happening with "Transitory Inflation" now. The supply shock IS transitory and things WILL normalize, but only in the same sense that pandemics do eventually end. Shit takes years, not quarters.
I think by 2024-2025 we'll be in this weird state where supply is back to normal but where there have been years of policy aimed at crushing demand.
All of COVID seems like a case of impatience.
The fact that the pandemic would last years was kind of obvious by late spring 2020 -- when in the history of humanity have humans ever experienced a pandemic that didn't last for years/decades? (I'm not here to debate masks or whatever public health measures; that's entirely tangential to the point that pandemics don't just go away after a few months.) Pandemics do end. Just not in a few financial quarters.
The same thing is happening with "Transitory Inflation" now. The supply shock IS transitory and things WILL normalize, but only in the same sense that pandemics do eventually end. Shit takes years, not quarters.
I think by 2024-2025 we'll be in this weird state where supply is back to normal but where there have been years of policy aimed at crushing demand.
Both https://en.wikipedia.org/wiki/2002%E2%80%932004_SARS_outbrea... and https://en.wikipedia.org/wiki/2009_swine_flu_pandemic were mostly over relatively quickly.
Agree on the macro. Why the need to crush demand now, and what steps by what actors are you identifying as designed to crush demand?
Powell has said explicitly that one of the Fed's short term goals is to bring down wages.
"What's this? The American working class is struggling because wages haven't kept pace with cost of living in 50 years? Surely suppressing wages even more will fix that!"
Personally, I think this slow moving inflation disaster is the result of the US government's inability to raise taxes. They have to reduce the money supply somehow to fight inflation and they're doing it with one hand (fiscal policy) tied behind their back. I suspect the reason is because tax increases are politically toxic while monetary policy changes made by the Fed are seen as apolitical. To be even more cynical about it, one could argue that the wealthy people and corporations who control politicians have an obvious interest in preventing tax increases even when it would benefit the economy as a whole in the long term.
Tax policy also acts much more slowly for individuals. Beyond that, I don’t think this is US-specific issue. Are there any countries at the moment trying to address near-term inflation via fiscal policy?
> Personally, I think this slow moving inflation disaster is the result of the US government's inability to raise taxes
I'd argue the opposite. We print absolutely insane amounts of money, which is an indirect tax via inflation (and a regressive one at that, since the rich own more inflation-resistant asset classes than the poor, who don't really own any assets). Higher taxes and less money printing would make that hidden tax less hidden, which is good, but the core problem is spending/printing too much, not taxing insufficiently.
I'd argue the opposite. We print absolutely insane amounts of money, which is an indirect tax via inflation (and a regressive one at that, since the rich own more inflation-resistant asset classes than the poor, who don't really own any assets). Higher taxes and less money printing would make that hidden tax less hidden, which is good, but the core problem is spending/printing too much, not taxing insufficiently.
Bring down wage growth, not the wages.
Basically manufacturing is at an all time low, and rebooting post-pandemic will be harder with higher wages given how strong the U.S. dollar is. Of course, wage stagnation is finally being corrected so there may be little to control that.
Basically manufacturing is at an all time low, and rebooting post-pandemic will be harder with higher wages given how strong the U.S. dollar is. Of course, wage stagnation is finally being corrected so there may be little to control that.
He said that a goal is to slow wage increases, not decrease wages.
His exact words were "get wages down".
Here's a quote from Powell himself:
> And so what we need to do is we need to get demand down, give supply a chance to recover and get those to align. So how might we do that? Right now, in the labor market, there are two job openings for every unemployed person. It’s historically high-level. So in principle, and I’m not saying this will be easy to do, in principle, you could moderate demand, reduce demand to the point where job openings move down substantially, and the labor market gets much closer to being in balance. And that would affect … wages would still be moving up at healthy levels. They wouldn’t have to go down, but ultimately they would be at levels that would be consistent with 2% inflation.
> And so what we need to do is we need to get demand down, give supply a chance to recover and get those to align. So how might we do that? Right now, in the labor market, there are two job openings for every unemployed person. It’s historically high-level. So in principle, and I’m not saying this will be easy to do, in principle, you could moderate demand, reduce demand to the point where job openings move down substantially, and the labor market gets much closer to being in balance. And that would affect … wages would still be moving up at healthy levels. They wouldn’t have to go down, but ultimately they would be at levels that would be consistent with 2% inflation.
it is vital that the poors remain poors. The entire economy depends on it!
Wish this was sarcasm. Worst part is he is absolutely talking about the lower level wages in the $10 - $20 and hour range.
Because high AD is causing inflation? The Fed is trying to reduce demand.
Nearly every central bank.
So does that mean we are in line with a recession in 2023, regardless of efforts in play now?
What is being done to crush demand?
The length of the pandemic seems largely due to your definition of the pandemic. From a practical perspective, once people can vaccinate to prevent death AND get a cure, many people's definition of "pandemic" is that it is over.
I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate?
I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate?
> From a practical perspective, once people can vaccinate to prevent death AND get a cure, many people's definition of "pandemic" is that it is over.
Vaccines weren't available until summer 2021, which was unexpectedly early, and still aren't widely available in some parts of the world. No reasonable "definition" puts the end of a pandemic at summer 2020, but "short and temporary" was certainly the messaging in March 2020.
What I'm saying is that in March 2020 (or perhaps April) it was was obvious that the world would not be out of the pandemic for years in the best case scenario, but many people believed things would be back to normal in weeks or perhaps months. Which... just doesn't have any historical precedent and was clearly wishful thinking. I remember expressing this on the phone to family and friends -- that covid would last years -- and no one believed me.
> I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate?
Central banks change interest rates in order to shift aggregate demand curves. "Curbing inflation" sounds less negative than "destroying demand", but the central tenant of central bank interest rate policy is that the two are causally related to one another.
Vaccines weren't available until summer 2021, which was unexpectedly early, and still aren't widely available in some parts of the world. No reasonable "definition" puts the end of a pandemic at summer 2020, but "short and temporary" was certainly the messaging in March 2020.
What I'm saying is that in March 2020 (or perhaps April) it was was obvious that the world would not be out of the pandemic for years in the best case scenario, but many people believed things would be back to normal in weeks or perhaps months. Which... just doesn't have any historical precedent and was clearly wishful thinking. I remember expressing this on the phone to family and friends -- that covid would last years -- and no one believed me.
> I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate?
Central banks change interest rates in order to shift aggregate demand curves. "Curbing inflation" sounds less negative than "destroying demand", but the central tenant of central bank interest rate policy is that the two are causally related to one another.
I'm still seeing businesses close because their staff are out sick and I have more personal contacts who've taken sick leave in the past month than any time I can remember in the past 2 years. In my mind that's still in a pandemic.
Perhaps if it weren't for the war in Ukraine - wheat and automotive wire harnesses from Ukraine are being sorely missed on world markets. And sanctions against Russia are obviously driving up prices on things that people would otherwise purchase from Russia, like natural gas.
inflation started way before Russia/Ukraine was a thing.
Well yeah, COVID and money-printing set that in motion a while ago...but things might have been on the way back to normal if a war hadn't further disrupted supply chains. Or maybe not, we'll never really know.
Guessing we'll see waves for a couple years until anything returns to normal. Likely we'll be oversupplied in a recession soon.
https://en.wikipedia.org/wiki/Bullwhip_effect
What I really wonder is what should be done about it. Seems like too many efforts to mitigate things could cause a separate whip?
https://en.wikipedia.org/wiki/Bullwhip_effect
What I really wonder is what should be done about it. Seems like too many efforts to mitigate things could cause a separate whip?
Normal?
Covid is still a thing
Wages are up
Housing bubble
Etc
Immediately below the article title:
"Inbound container volumes to the US are reverting to pre-pandemic levels"
The direct answer to your question is, yes.
"Inbound container volumes to the US are reverting to pre-pandemic levels"
The direct answer to your question is, yes.
Consumers and businesses called the bluff by simply waiting to buy everything from doorknobs to drywall to lumber to cars. For me I’ll be waiting until timber businesses start firing people before I buy another board foot. I’m not running a charity here and I want to see a little blood pooling under these businesses for their haughtiness.
It's very strange. Some items have a glut of inventory, others are very difficult to find. Weird substitutions are taking place in some cases, like the GE light bulbs from Mexico a friend spotted at a local retailer in Boston.
Prices seem higher regardless, which ties into higher fuel and labor costs.
Prices seem higher regardless, which ties into higher fuel and labor costs.
Target just announced they're going to start reducing prices on a lot of their inventory and signaled their profits are going to drop for this year.
Target Corp. will cut prices, cancel orders and take other steps to cut its bloated inventory, moves that will lower its profit in the current quarter more than executives thought just three weeks ago.
Demand softened for home products, like furniture, that were popular during the height of the pandemic. In addition to presenting a financial cost, a lot of those items are bulky and take up considerable space in stores and warehouses.
"We got more of that product than we want to have, and we think dealing with that head-on by being aggressive now positions us with the right flexibility for the back half of the year," he said.
But it will come at a cost. .
While its excess inventory will be marked down, Target may see its overall price level rise this summer as it grapples with transportation and other costs that are being affected by inflation.
"Price is the last lever that we pull. … But price increases are unavoidable given the inflationary pressures that we've seen in many categories," Fiddelke said.
https://www.startribune.com/target-will-slash-prices-to-get-...
Target Corp. will cut prices, cancel orders and take other steps to cut its bloated inventory, moves that will lower its profit in the current quarter more than executives thought just three weeks ago.
Demand softened for home products, like furniture, that were popular during the height of the pandemic. In addition to presenting a financial cost, a lot of those items are bulky and take up considerable space in stores and warehouses.
"We got more of that product than we want to have, and we think dealing with that head-on by being aggressive now positions us with the right flexibility for the back half of the year," he said.
But it will come at a cost. .
While its excess inventory will be marked down, Target may see its overall price level rise this summer as it grapples with transportation and other costs that are being affected by inflation.
"Price is the last lever that we pull. … But price increases are unavoidable given the inflationary pressures that we've seen in many categories," Fiddelke said.
https://www.startribune.com/target-will-slash-prices-to-get-...
I read an article in the newspaper about this which quotes analysts saying this isn't about Target trying to fix its prices, but because Target is trying to recover from a series of big mistakes.
Apparently, it handled the start of the pandemic poorly and couldn't keep anything in stock. Then just as the winter wave started to ease, it bet big that people would continue to stay locked up and bought tons of home improvement things it should have had in stock a year ago.
Personally, my Target runs have gone from every other week to almost never, because it simply doesn't seem to ever have the things I want and need anymore.
Apparently, it handled the start of the pandemic poorly and couldn't keep anything in stock. Then just as the winter wave started to ease, it bet big that people would continue to stay locked up and bought tons of home improvement things it should have had in stock a year ago.
Personally, my Target runs have gone from every other week to almost never, because it simply doesn't seem to ever have the things I want and need anymore.
I'm not a regular Target shopper, but when I've gone in for specific purchases (basic clothes, small appliances, gifts) I've found only empty shelves where what I wanted should have been, surrounded by stuff that looks like it's been there for years. Reminds me a lot of K-Mart or Sears in the first years of their decline–nothing you want and everything you don't.
So it's not just me? I'm trying to think what my Target store would mark down! It's kind of hard to mark down aisle after aisle of sparsely-stocked shelves!
Well, silver lining is that seems like a really strong signal that we're heading towards disinflation.
No, it's a signal that we're heading for lower demand, at least partly because of inflation.
The point is this might stop inflation in its track.
I am not saying that this is the scenario but it's worth considering that the start of economic collapse from inflation tends to happen when companies have products to sell, but they can't afford to sell them for prices that people can afford to pay.
This does not end inflation, but tends to exasperate it. The company goes out of business and you now have fewer things in the economy, but the same amount of money. The result is further inflation.
This does not end inflation, but tends to exasperate it. The company goes out of business and you now have fewer things in the economy, but the same amount of money. The result is further inflation.
But Target is likely not going out of business. Even if they have to sell stuff at a loss. And even if they did, their inventory would be auctioned off and resold, it would not just be chucked in a landfill.
I agree that they are probably not going out of business, though it may be closer than it seems. The article suggests they're now going to be running on a 2% margin after the clearance. Even if things get worse, they can probably afford to run in the red for some significant period of time (and perform various liquidations to get back into the black if necessary), but that's a quite unstable scenario.
The issue with a retailer going out of business is not the retailer itself, but the manufacturers behind it. Target failing to sell their product reflects large numbers of manufacturers being unable to sell their product.
The issue with a retailer going out of business is not the retailer itself, but the manufacturers behind it. Target failing to sell their product reflects large numbers of manufacturers being unable to sell their product.
Which is counter intuitive. If your money is going to worth less soon, you should probably spend it. This is the idea behind why “gentle inflation is good”.
I’m looking at expensive hard good rights now. Purchases that I’ve been putting off for awhile because I know those prices are going up soon.
I’m looking at expensive hard good rights now. Purchases that I’ve been putting off for awhile because I know those prices are going up soon.
However if your money is going to be worth less soon, you might be inclined to avoid all non-essential purchases so you have more money left for stuff you need (food, rent, gas).
I mean, it's literally lower prices which means lower CPI. You can make an academic debate over whether that's technically disinflation, but the BLS report is going to post a lower number.
No, it means lower prices on the limited number of goods which were oversupplied that nobody wants right now. It doesn't mean lower prices on the stuff everyone is still buying like food and gas.
You've got cause and effect backwards.
I'm saying that higher inflation causes lower demand. Are you saying that lower demand causes higher inflation? If so, can you explain how you think that cause-and-effect works?
Lower demand causes lower inflation, lower demand is indicative of Fed tightening. Higher inflation often goes hand in hand with higher demand. Don't reason from a price change.
Pricing and supply can cause strange results during shortages - if bulbs from China are even a fraction of a penny cheaper in normal times they’ll be picked, but if they’re not available the closest could be mexico or even the US.
I’ve noticed the local “free range fancy chicken eggs” have remained $4 since two years ago but the cheap eggs have gone from a Buck (sometimes 50 cents on sale) to almost the same $4.
I’ve noticed the local “free range fancy chicken eggs” have remained $4 since two years ago but the cheap eggs have gone from a Buck (sometimes 50 cents on sale) to almost the same $4.
>I’ve noticed the local “free range fancy chicken eggs” have remained $4 since two years ago but the cheap eggs have gone from a Buck (sometimes 50 cents on sale) to almost the same $4.
I noticed this too and stared buying the free range eggs again (used to get these all the time for my ramen eggs). There's definitely a difference but I don't go through enough eggs or cook them in a way that I typically care (no time to prep ramen and therefor nitamgo anymore).
I noticed this too and stared buying the free range eggs again (used to get these all the time for my ramen eggs). There's definitely a difference but I don't go through enough eggs or cook them in a way that I typically care (no time to prep ramen and therefor nitamgo anymore).
The only difference I've ever noticed is that the more organic or free-range an egg claims to be, the more likely it is to have defects like blood inclusions. If I don't know where the egg came from, the actual taste isn't distinguishable. Yolk color is easily manipulated and means nothing.
The only difference I notice is in the white which seems to have more protein from the cage free eggs. It's usually not too noticeable to me except with hard and soft boiled eggs where the egg white just seems more dense/thicker. I use these for my soft boiled marinated eggs so there's more white to absorb my marinate goodness.
Single data point: a rural egg seller on the washington peninsula just raised their prices from $4->$5 per dozen because their feed costs recently doubled.
Yep, lots of price changes will happen and apparently random intervals as contracts and prices expire. Some farms will be almost entirely isolated from much of it (if they grow their own feed corn for the chickens it could be a year or two) others will be affected immediately.
The GE light bulbs I find in big box stores are GE as a licensed brand name. They are made all over by someone licensing the name.
Weird substitutions are taking place in some cases, like the GE light bulbs from Mexico a friend spotted at a local retailer in Boston.
People in border states have seen this since the start of the pandemic. I remember the first time that the only toilet paper available in Kroger was all Mexican brands.
I suspect that Mexican companies can make more money shipping goods to the U.S. than selling them locally. I also wonder if the demand from the north had made shortages in Mexico worse.
People in border states have seen this since the start of the pandemic. I remember the first time that the only toilet paper available in Kroger was all Mexican brands.
I suspect that Mexican companies can make more money shipping goods to the U.S. than selling them locally. I also wonder if the demand from the north had made shortages in Mexico worse.
Mexico makes sense, there's NAFTA, just pay transport, tariffs/customs are waived. Not really weird, take a look at cars and manufacturing and it's been that way for the over the past two decades.
I thought Trump got rid of NAFTA?
There were some slight changes in a few areas but it’s essentially the same. https://en.wikipedia.org/wiki/United_States–Mexico–Canada_Ag...
What Trump sank was the US joining the Trans Pacific Partnership.
What Trump sank was the US joining the Trans Pacific Partnership.
No, he 're-negotiated' NAFTA as the United States-Mexico-Canada Agreement, or USMCA.
There weren't that many changes, but he did implement the TPP's intellectual property rules.
There weren't that many changes, but he did implement the TPP's intellectual property rules.
Or the oligopolies that are allowed to operate unfettered in the USA.
I doubt the lightbulb cartel is still a thing. While oligopolies and monopolies exist, it's not the answer to every inflating article.
>> Or the oligopolies that are allowed to operate unfettered in the USA.
> I doubt the lightbulb cartel is still a thing. While oligopolies and monopolies exist, it's not the answer to every inflating article.
An oligopoly doesn't have to also be a cartel, it just has to have few competitors.
I think the GP is complaining about how the US as pretty much allowed any market consolidation short of outright monopoly for a long time, which means a lot of companies have too little competition and therefore too much market power.
> I doubt the lightbulb cartel is still a thing. While oligopolies and monopolies exist, it's not the answer to every inflating article.
An oligopoly doesn't have to also be a cartel, it just has to have few competitors.
I think the GP is complaining about how the US as pretty much allowed any market consolidation short of outright monopoly for a long time, which means a lot of companies have too little competition and therefore too much market power.
Is an oligopoly that isn't a cartel problematic? If the lightbulb manufacturers jack up their prices, how long can that last until new incumbents come around and compete margins away?
You know what people hate more than oligopolies? High prices. Consolidation is not de facto problematic. Unless said consolidation leads to cartel-like behavior or entrenching regulations (which even Adam Smith recognized as a problem and a propensity of elites, I'm not arguing in favor of laissez-faire capitalism), margins will be cyclical in a free market and colluding oligopolies will eventually face new incumbents, because high margins attracts competition and investments.
There are exceptions like markets where cost is prohibitive for new participants, say telecom (hello Rogers-Bell-Telus), but I don't see how that applies to lightbulbs in the 21st century.
You know what people hate more than oligopolies? High prices. Consolidation is not de facto problematic. Unless said consolidation leads to cartel-like behavior or entrenching regulations (which even Adam Smith recognized as a problem and a propensity of elites, I'm not arguing in favor of laissez-faire capitalism), margins will be cyclical in a free market and colluding oligopolies will eventually face new incumbents, because high margins attracts competition and investments.
There are exceptions like markets where cost is prohibitive for new participants, say telecom (hello Rogers-Bell-Telus), but I don't see how that applies to lightbulbs in the 21st century.
Well that shouldn't come at a surprise since U.S. antitrust law is aimed at protecting consumer interests, not protecting competition.
> Well that shouldn't come at a surprise since U.S. antitrust law is aimed at protecting consumer interests, not protecting competition.
And a lot of people are now questioning the wisdom and effectiveness of that approach.
Also a, "that shouldn't come [as] a surprise" response doesn't really address anything in this subthread. I don't think anyone is surprised that was the approach that was taken or its result, they just disagree with it.
And a lot of people are now questioning the wisdom and effectiveness of that approach.
Also a, "that shouldn't come [as] a surprise" response doesn't really address anything in this subthread. I don't think anyone is surprised that was the approach that was taken or its result, they just disagree with it.
> I don't think anyone is surprised that was the approach that was taken or its result, they just disagree with it.
You mean you disagree with it, despite there being many markets where less competition doesn't hurt or even benefits the consumer.
Also, addressing the tone or being grammar nazi doesn't add much to discussion.
You mean you disagree with it, despite there being many markets where less competition doesn't hurt or even benefits the consumer.
Also, addressing the tone or being grammar nazi doesn't add much to discussion.
I'll put this as simply as possible: you didn't understand what I wrote, but chose to respond anyway.
A 'you didn't understand what I wrote' response doesn't really address anything in this subthread.
[deleted]
I didn't say it was. But the four meat producers raking in 40% higher profits while whining about a labor shortage should be top of the docket for any politician claiming to want to "do something" about inflation.
Isn't the baby-formula fiasco yet another wake-up call?
While we're at it, let's stop burning our food. Growing (and subsidizing) corn for fuel is asinine.
Isn't the baby-formula fiasco yet another wake-up call?
While we're at it, let's stop burning our food. Growing (and subsidizing) corn for fuel is asinine.
Of course it’s still a thing.
Why wouldn’t it be?
Why wouldn’t it be?
Because manufacturing lightbulbs today is a well established process and basically any manufacturer can produce them if they so chose, as opposed to 1925's situation. It also quite empirically is no longer a thing as LED bulbs can last up to 100k hours [1] and are often rated for 50k [2], as opposed to the cartel's 1k [3].
1: https://www.inlineelectric.com/lifespan
2: https://www.bulbs.com/learning/ledfaq.aspx
2: https://en.wikipedia.org/wiki/Phoebus_cartel
1: https://www.inlineelectric.com/lifespan
2: https://www.bulbs.com/learning/ledfaq.aspx
2: https://en.wikipedia.org/wiki/Phoebus_cartel
You don't seem to understand how modern markets work. See for example Coca-cola. Anyone can create a drink that looks like Coca-cola. However, we know it has a near monopoly on that segment of the market. Just because a product can be manufactured, doesn't mean that companies have the capacity to create and produce it at the scale needed to become profitable.
That's a separate subject to anti-competitive oligopolies. Let me doubt people are loyal to lightbulb manufacturers and that the situation is remotely comparable to one of the most powerful and well established consumer brands in history.
But since you brought up this subject, why should I care consumer brands are exercising their pricing power for as long as I have access to the low-margin alternatives? People paying $5 for takeout coffee at Starbucks doesn't affect me in any way. It would affect me if Coke and Starbucks prohibited the existence of competitors or extinguished them, but that isn't the case (for these examples at least, such anti-competitive behaviors do exist) as you have yourself implicitly noted in your comment.
But since you brought up this subject, why should I care consumer brands are exercising their pricing power for as long as I have access to the low-margin alternatives? People paying $5 for takeout coffee at Starbucks doesn't affect me in any way. It would affect me if Coke and Starbucks prohibited the existence of competitors or extinguished them, but that isn't the case (for these examples at least, such anti-competitive behaviors do exist) as you have yourself implicitly noted in your comment.
> It would affect me if Coke and Starbucks prohibited the existence of competitors
In a sense they do, every Starbucks in existence is a store where a traditional coffee shop cannot be stablished. How many more Starbucks it takes to completely shut other competitors out of the market?
In a sense they do, every Starbucks in existence is a store where a traditional coffee shop cannot be stablished. How many more Starbucks it takes to completely shut other competitors out of the market?
I don't think it's useful to debate fictitious scenarios. You know of a place where there are only Starbucks selling coffees? I can't think of one, as someone that never steps in a Starbucks, yet often buys takeout coffee in other fastfoods.
On the contrary, Starbucks is frequently -- maybe even usually -- the only place in a given area that serves fresh coffee of fair to moderate quality. You can get coffee in McDonalds or Burger King, but it's not very good, and the employees know even less about coffee than someone working for Starbucks. The absence of competition in that midrange market means that Starbucks faces relatively little pressure to maintain lower prices and higher quality.
I can only think of a single other dedicated coffee shop near my suburb of Cincinnati, and it's a cat cafe that serves dogshit coffee (or catshit, I suppose, and I'm not referring to the civet). At least they have cute adoptable cats to play with!
I can only think of a single other dedicated coffee shop near my suburb of Cincinnati, and it's a cat cafe that serves dogshit coffee (or catshit, I suppose, and I'm not referring to the civet). At least they have cute adoptable cats to play with!
socialists in 2019: "evil oligoplies are driving down prices unfairly meaning local businesses cant compete and are forced to close"
socialists in 2022: "evil oligopolies are raising prices unfairly causing inflation"
havent found one that could explain why they didnt "collude" to raise prices in 2008-2019.
whereas its quite clear what caused the high prices was rather insane govt spending caused by socialist policies.
socialists in 2022: "evil oligopolies are raising prices unfairly causing inflation"
havent found one that could explain why they didnt "collude" to raise prices in 2008-2019.
whereas its quite clear what caused the high prices was rather insane govt spending caused by socialist policies.
isn't the whole "walmart cycle" of "aggressively undercut local businesses until a monopoly has been established, then increase prices once you have control of the market" pretty well-established at this point? you're phrasing the two halves of that cycle as if it's supposed to be some sort of a contradiction.
Applies to Amazon too nowadays.
Applies to Amazon too nowadays.
no actually walmart has been keepign their prices low. thats paritally why they took a massive stock hit in may. (same with target).
guess its just a coincidence that they chose now to do it. and not 2017
guess its just a coincidence that they chose now to do it. and not 2017
You are spot-on about your criticism of oligopolies as an explanation. But for your theory, you have to explain the absence of inflation from 2008-2019. It's not like government spending was sane during those years...
https://datalab.usaspending.gov/americas-finance-guide/defic...
^^ that chart.
also, giving people money directly with stuff like unemployment and stimulus checks is extremely stimulative compared to say building a bridge.
massive supply shocks didnt help either. but they govt knew there was supply shocks and increased demand anyway. despite warnings by democratic economists. (we just found out yellen herself had misgivings about the 1.9T price tag)
^^ that chart.
also, giving people money directly with stuff like unemployment and stimulus checks is extremely stimulative compared to say building a bridge.
massive supply shocks didnt help either. but they govt knew there was supply shocks and increased demand anyway. despite warnings by democratic economists. (we just found out yellen herself had misgivings about the 1.9T price tag)
Take a look at the stock market, housing, education and medical from 2008 to 2019 and tell me there wasn't inflation.
The core aspect of socialism is the means of production and the fruits of labor [and exchange of all this] in the hands of the people. Only the distribution part are what any safety net programs are about. I assume socialist policies means govt programs.
The people you’re referring to would not be saying companies are taking advantage of the zeitgeist and raking in bigger profits knowing inflation talks will take all the blame or straw manning like your 2022 line. Gas prices rising so much providing incredible profits is an obvious example of this.
No one in the White House or Senate are socialists. Bernie is like the Nordic model: capitalism + large safety nets + govt programs. The senate has been in republican control or with the useless Dem leaning current situation with too many conservative Dems. Trump’s regime did some of the biggest “socialist policies” spending. It is wild to assert the right pass socialist policies.
The people you’re referring to would not be saying companies are taking advantage of the zeitgeist and raking in bigger profits knowing inflation talks will take all the blame or straw manning like your 2022 line. Gas prices rising so much providing incredible profits is an obvious example of this.
No one in the White House or Senate are socialists. Bernie is like the Nordic model: capitalism + large safety nets + govt programs. The senate has been in republican control or with the useless Dem leaning current situation with too many conservative Dems. Trump’s regime did some of the biggest “socialist policies” spending. It is wild to assert the right pass socialist policies.
1. Between 2008-2019 they just didn't realize they could. I have found the years you quote to be high priced. Competition just went done in every sector I depend on. Banks, cell phone companies, cable, energy prices went up without inflation, etc.
2. The minute we started talking about inflation, every company in my life took advantage of it--overnight.
3. I'm with you on the government spending. I understood the money thrown at Covid, but that's done, and the working poor will never see those checks ever again. And I'm no fan of the Infrastructure Bill.
4. If you don't wonder why gasoline prices fluctuate by a dollar hourly at some stations, while making record profits; I don't know what to say.
5. Every large company made record profits during Covid, and we don't know why? They didn't lower prices.
Again the $300 extra per week for unemployed people affected by Covid was a one time thing. Companies might get free money as usual, but not the little guys.
It was conservatives (Trumpy) that passed first 2 trillion stimulious package.
America has just a few badly run "socialist" programs.
I think we all have seen our homeless population get bigger each month.
Oh yea, federal government programs. Basically (Cal-fresh, and medi-cal)have gone back to make qualifying very hard.
2. The minute we started talking about inflation, every company in my life took advantage of it--overnight.
3. I'm with you on the government spending. I understood the money thrown at Covid, but that's done, and the working poor will never see those checks ever again. And I'm no fan of the Infrastructure Bill.
4. If you don't wonder why gasoline prices fluctuate by a dollar hourly at some stations, while making record profits; I don't know what to say.
5. Every large company made record profits during Covid, and we don't know why? They didn't lower prices.
Again the $300 extra per week for unemployed people affected by Covid was a one time thing. Companies might get free money as usual, but not the little guys.
It was conservatives (Trumpy) that passed first 2 trillion stimulious package.
America has just a few badly run "socialist" programs.
I think we all have seen our homeless population get bigger each month.
Oh yea, federal government programs. Basically (Cal-fresh, and medi-cal)have gone back to make qualifying very hard.
I don’t think we’re going to a regime of low prices and suppressed wages. That phase of the world’s economic cycle is on its last legs. Demographics are collapsing across the world and the most prosperous, numerically largest baby boomer generation are entering their non-productive, fiscally conservative retirement years.
This just might be the “new normal”. The lack of readily available products might be a problem, but there’s also a good chance we see much higher wages across the board
This just might be the “new normal”. The lack of readily available products might be a problem, but there’s also a good chance we see much higher wages across the board
Not if the fed has anything to say about it. The plan now is to let it crash since hourly workers have gotten uppity and are refusing to work terrible jobs for even worse pay. All the talk of "wage price spiral" and all that shows their hand.
Its incredible to me how more people don't revolt just watching Powell talk. He flat out does not acknowledge the possibility that wages should rise due to increased productivity. Any wage increase is just a sign of inflation.
The whole goal of the Fed is to keep salaries down. The reason is that inflation is measured only on household items that can be bought by low income families. You don't see the Fed worrying about inflation in housing, in stocks, and investments in general. That inflation they consider to be good.
Well, all of that is true. There’s also the printing of many trillions of dollars to raise all prices on all things.
Actually there are more millenials than baby boomers. If we see significant wage increases and Real Estate decreases, the millenial generation might start to procreate to a reasonable extent.
I think we're already "procreating to a reasonable extent," where "reasonable" is defined in a context where many of us aren't in a stable enough financial situation to responsibly have kids. An alternative phrasing would be "might be able to buy houses and start families."
> If we see significant wage increases and Real Estate decreases, the millenial generation might start to procreate to a reasonable extent.
The leading edge of millennials are already way out of their best reproduction years. Middle's very much iffy. The youngest are OK but will be starting to enter that "your risk of complications and birth defects are increasing a ton year over year" territory soon.
The leading edge of millennials are already way out of their best reproduction years. Middle's very much iffy. The youngest are OK but will be starting to enter that "your risk of complications and birth defects are increasing a ton year over year" territory soon.
> Actually there are more millenials than baby boomers. If we see significant wage increases and Real Estate decreases, the millenial generation might start to procreate to a reasonable extent.
And cheat on Capital?
And cheat on Capital?
Eh, not really. I mean, yes, but no. Based on terminology, I'm going to stick with the US demographic. In that setting, the peak 5 year bracket of millennials is currently 7.2% of US population and 23.8M people against a world background of 7.8B people. The boomer peak at the same age was was 8.4% and 22.7M people against a global population of 5.9B. So, yes, there are quantitatively more millennials now, and the number of millennials is larger at the same cohort timepoint, but as a fraction of population, they're smaller and will have a smaller effect on global affairs.
Globally, it's a bit different, the bulge of millennials is in fact larger by all measures, but that bulge isn't really driven by the US or Europe, it's the Middle East, and to a lesser extent, East Asia.
https://www.populationpyramid.net/united-states-of-america/2...
https://www.populationpyramid.net/world/2021/
https://www.populationpyramid.net/united-states-of-america/1...
https://www.populationpyramid.net/world/1997/
Globally, it's a bit different, the bulge of millennials is in fact larger by all measures, but that bulge isn't really driven by the US or Europe, it's the Middle East, and to a lesser extent, East Asia.
https://www.populationpyramid.net/united-states-of-america/2...
https://www.populationpyramid.net/world/2021/
https://www.populationpyramid.net/united-states-of-america/1...
https://www.populationpyramid.net/world/1997/
Big ifs attached to a short fuse
This is not an onshoring story.
Vehicles and automobiles – $306.7 billion. Global supply chain issues have GREATLY reduced imports (availability of vehicles, while increasing prices).
Machinery (including computers and hardware) – $386.4 billion. Chip shortage has greatly reduced both that category and categories the depend on chips (autos aside as previously mentioned).
Aerospace – $139.1 billion. Airlines continue to struggle, now due to staffing challenges that find them cutting flights. FAA oversight has stalled Boeing production on 777X and possibly other models, cutting imports necessary to build these aircraft.
Gems and precious metals – $60.8 billion. Massive asset price increase and expectations that cannot continue has greatly reduced speculative demand.
Vehicles and automobiles – $306.7 billion. Global supply chain issues have GREATLY reduced imports (availability of vehicles, while increasing prices).
Machinery (including computers and hardware) – $386.4 billion. Chip shortage has greatly reduced both that category and categories the depend on chips (autos aside as previously mentioned).
Aerospace – $139.1 billion. Airlines continue to struggle, now due to staffing challenges that find them cutting flights. FAA oversight has stalled Boeing production on 777X and possibly other models, cutting imports necessary to build these aircraft.
Gems and precious metals – $60.8 billion. Massive asset price increase and expectations that cannot continue has greatly reduced speculative demand.
...oversight hasn't stalled Boeing production.
Boeing has stalled their own production by kneecapping their own Quality apparatus. The oversight is a given part. Don't blame the guy whose there to tell you you're doing it wrong.
Boeing has stalled their own production by kneecapping their own Quality apparatus. The oversight is a given part. Don't blame the guy whose there to tell you you're doing it wrong.
We were making too much stuff. Banks decided we needed to buy less stuff so they made less money. Now the leftover stuff will sit because we won’t make enough money for ourselves to buy it. We’ll adjust by reducing how much stuff we make so there’s no extra stuff to sit. Once that happens the economy will not be bad anymore and then we’ll make more money to buy stuff that doesn’t exist so we can start making more stuff…
Immediately below the (hyperbolic) title / headline:
"Inbound container volumes to the US are reverting to pre-pandemic levels"
The news is: supply chain is evening out and returning to previous norms.
But such honest would certainly be less click-worthy.
"Inbound container volumes to the US are reverting to pre-pandemic levels"
The news is: supply chain is evening out and returning to previous norms.
But such honest would certainly be less click-worthy.
But it will cause some dislocation for, say, truckers.
Should be top-rated comment.
Has domestic manufacturing ramped up in the US since covid? Or is this purely a demand side signal of consumers tightening their purse strings?
No only it didn't ramp up, it is going down the tubes. Labor is more expensive than ever, and even at high cost there is no job pool to restart production. Parts of the US are suffering of massive draught. Interest rates are up. The stock market is down. All of this conspires to reduce industrial production, not the other way around.
Maybe factories should get smart and build machines that build machines to reduce labor, like china is doing.
Factories that are behind on automation cannot simply build & develop the machines you're describing in a short amount of time. It's not nearly as simple as "oh, just make a robot to do it. duh". Maybe some companies should have been more proactive about this pre-pandemic but there are many prohibitive reasons smaller operations were unwilling to do so. The economy is more likely to stabilize before the majority of factories (that aren't already doing so) are able to automate a meaningful amount of their work.
Well I can say that the demand from domestic manufacturing for software support is up, confirmed from several sources, so it doesn't seem like it's "going down the tubes".
Yes domestic manufacturing is doing fine. https://www.federalreserve.gov/releases/g17/current/default....
> Has domestic manufacturing ramped up in the US since covid?
Yes[1].
[1] https://fred.stlouisfed.org/series/IPMAN
Yes[1].
[1] https://fred.stlouisfed.org/series/IPMAN
Or it's the bullwhip effect in action in this part of the supply chain
My money would be on this, at least for a significant portion of the effect. This kind of situation is nearly inevitable, as one can see from observing people playing the Beer Distribution Game[1].
[1]: https://en.wikipedia.org/wiki/Beer_distribution_game
[1]: https://en.wikipedia.org/wiki/Beer_distribution_game
Currently, some of usually luxurious types of food are in lower demand in Germany than in previous years.
It's basically a choice if you will first buy necessities like meat (+80% price increase), butter (+50%), wheat flour (+100%), pasta(+100%), sunflower oil (+500%), or asparagus (-11%).
It's basically a choice if you will first buy necessities like meat (+80% price increase), butter (+50%), wheat flour (+100%), pasta(+100%), sunflower oil (+500%), or asparagus (-11%).
Where did you find butter that's only 50% more?! I've got a tip on some 3 EUR/liter sunflower oil in exchange ;)
Nothing quite like seeing Rapsöl (that's canola oil for North Americans) marketed as an artisanal product, for 5-6 EUR in little half liter dark bottles to preserve the nutty aroma, instead of clear plastic liter bottles for 1 EUR.
Meat is "only" about 20% more than I was used to paying - though that's a side-effect of buying non-caged/free-range which was already way more expensive than the cheap stuff. Eggs are also about 20% more, but again, free-range.
Nothing quite like seeing Rapsöl (that's canola oil for North Americans) marketed as an artisanal product, for 5-6 EUR in little half liter dark bottles to preserve the nutty aroma, instead of clear plastic liter bottles for 1 EUR.
Meat is "only" about 20% more than I was used to paying - though that's a side-effect of buying non-caged/free-range which was already way more expensive than the cheap stuff. Eggs are also about 20% more, but again, free-range.
In the US, I've been buying more eggs lately, because free range eggs haven't gone up in price nearly as much as unmarked (i.e. probably caged) eggs. Now that the difference in price is small enough, I'm using them more... though part of that is also from cutting back on meat as well, which have the same trend of higher end cuts not changing but cheap cuts / ground meat rising quite a bit.
That's definitely an interesting effect - both surprising (you'd think everyone would be affected by supply chain issues) and unsurprising (of course the industrial outfits feel the pain more acutely when they've spent so much effort min-maxing their production of animal products).
It is not only a demand question, supply seems also low: Usually, at this point in the year, country roads should be plastered with strawberry- and asparagus-selling stands (at least where I live). I have seen not a single one. Even if I wanted to get some asparagus, I wouldn't begin to know where to get them, as both crops when locally grown are highly seasonal and not all supermarkets carry them.
As a single IT guy with a reasonably good salary, I didn't notice much of the price increases - but I do notice when stuff becomes harder to get.
As a single IT guy with a reasonably good salary, I didn't notice much of the price increases - but I do notice when stuff becomes harder to get.
At least the supermarkets are starting to leave some items empty instead of spreading things out. How many times over the past two years did I think I'd lost my mind when I couldn't find something routine... no, I wasn't overlooking things, the supermarket employees were just trying to make it look nicer. I guess even they started to feel like this was some sort of gaslighting. "Oh, no, we're not out of dried yeast... we don't sell dried yeast!"
For people on typical German IT/engineering wages, there's nothing approaching a problem getting enough to eat, or even a varied and balanced diet, but don't plan an evening around a particular recipe you don't already have all the ingredients to!
Things are dicier for people like the old lady who looked to be on the verge of tears staring at artisanal canola oil in place of the 1 EUR/liter stuff she was used to buying.
I'm glad I reacted to the glut of cheap strawberries from Greece this early spring by buying a couple of kilos and making jam out of them. Already stocked up my canning ingredients for wild plum season. I have a feeling there will not be short trees full of overripe fruit this year, though.
For people on typical German IT/engineering wages, there's nothing approaching a problem getting enough to eat, or even a varied and balanced diet, but don't plan an evening around a particular recipe you don't already have all the ingredients to!
Things are dicier for people like the old lady who looked to be on the verge of tears staring at artisanal canola oil in place of the 1 EUR/liter stuff she was used to buying.
I'm glad I reacted to the glut of cheap strawberries from Greece this early spring by buying a couple of kilos and making jam out of them. Already stocked up my canning ingredients for wild plum season. I have a feeling there will not be short trees full of overripe fruit this year, though.
> At least the supermarkets are starting to leave some items empty instead of spreading things out. How many times over the past two years did I think I'd lost my mind when I couldn't find something routine... no, I wasn't overlooking things, the supermarket employees were just trying to make it look nicer. I guess even they started to feel like this was some sort of gaslighting. "Oh, no, we're not out of dried yeast... we don't sell dried yeast!"
It frustrates the shit out of me that grocery stores will move product to fill in empty space rather than make it obvious something is sold out, mainly because they don't move/remove price tags. As a result, items sit over the price tag for another product and it causes confusion.
Customers don't read the small print indicating what the price tag is for, just what the price says on it. So, for example, if they're out of the 50-count Advil bottles, they'll fill in the empty space with 200-count bottles that normally sit next to them. Except now, you have 200-count bottles sitting over the 50-count price tag, and customers will expect the 50-count price.
It frustrates the shit out of me that grocery stores will move product to fill in empty space rather than make it obvious something is sold out, mainly because they don't move/remove price tags. As a result, items sit over the price tag for another product and it causes confusion.
Customers don't read the small print indicating what the price tag is for, just what the price says on it. So, for example, if they're out of the 50-count Advil bottles, they'll fill in the empty space with 200-count bottles that normally sit next to them. Except now, you have 200-count bottles sitting over the 50-count price tag, and customers will expect the 50-count price.
> It frustrates the shit out of me that grocery stores will move product to fill in empty space rather than make it obvious something is sold out
I work in the grocery industry. Shelf facings are set centrally by category managers and, although store management does have some discretion, if staff is willy nilly moving items just to cover up out-of-stocks that's absolutely against the rules. Not that this fact helps anyone, I guess.
I'd definitely complain to management if you see that kind of behavior.
I work in the grocery industry. Shelf facings are set centrally by category managers and, although store management does have some discretion, if staff is willy nilly moving items just to cover up out-of-stocks that's absolutely against the rules. Not that this fact helps anyone, I guess.
I'd definitely complain to management if you see that kind of behavior.
Oh, believe me, I complained about it all the time when I worked there. Management specifically said they think empty shelves look bad and ordered their employees to do it.
Doesn't have to be consumers tightening, but rather shifting demand to non-manufactured physical products like restaurants, concerts, travel, etc.
Ye I wonder what the shift from local consumtion to tourism etc leads to. All WFH porches are built by now.
> Inbound container volumes to the US are reverting to pre-pandemic levels
Does not sound too drastic.
> Inbound container volumes to the US are reverting to pre-pandemic levels
Does not sound too drastic.
> Has domestic manufacturing ramped up in the US since covid?
How would that even be possible? The U.S. had very little manufacturing know-how leftover even before COVID, and now that's coupled with one of the most serious pandemics in history, political and economic turmoil if not chaos, and supply chain issues. How would a domestic manufacturing industry rise out of this? Where would people get the chips to build out the manufacturing?
Of course, maybe it did ramp up (?), but I would be wholly surprised.
How would that even be possible? The U.S. had very little manufacturing know-how leftover even before COVID, and now that's coupled with one of the most serious pandemics in history, political and economic turmoil if not chaos, and supply chain issues. How would a domestic manufacturing industry rise out of this? Where would people get the chips to build out the manufacturing?
Of course, maybe it did ramp up (?), but I would be wholly surprised.
US manufacturing has roughly doubled in inflation-adjusted dollar terms, while dropping by 30-something percent as a share of GDP (because GDP was rising much faster than that, over the same time span) since 1997.
Our factories are much more productive than they used to be, so may require fewer workers, and they've not been growing as fast as e.g. services and finance, but we still have plenty.
Our factories are much more productive than they used to be, so may require fewer workers, and they've not been growing as fast as e.g. services and finance, but we still have plenty.
Is this "doubling" simply in terms of production dollars? If our factories are more productive, that's great, but I don't think it addresses my point, which is more about diversity and capability versus production numbers. Even you point out that manufacturing production has not grown with the rest of the economy. And I didn't mean to imply the U.S. has no manufacturing.
People employed in manufacturing in the US—not productivity, employees—is about the same as in 1941 just before Pearl Harbor. We had worse tech then, about the same number of people working in manufacturing, and our factories produced a tiny fraction of the output per worker that a modern factory does.
IOW we should be way more capable of rapid expansion of industrial capacity than 1941 America was, and 1941 America did a pretty damn good job of it over the following few years (months, even).
We do also have a lot more domestic demand than then, for multiple reasons, but again, modern factories are way more productive per worker than a factory in 1941.
What could lag is specifically high tech manufacturing. A car factory or aluminum plant is one thing. A chip fab is another. That kind of extremely-high-capital-cost ultra-specialized manufacturing, we probably should have been forcing to be at least partly on-shore for security reasons, even if it caused higher prices.
IOW we should be way more capable of rapid expansion of industrial capacity than 1941 America was, and 1941 America did a pretty damn good job of it over the following few years (months, even).
We do also have a lot more domestic demand than then, for multiple reasons, but again, modern factories are way more productive per worker than a factory in 1941.
What could lag is specifically high tech manufacturing. A car factory or aluminum plant is one thing. A chip fab is another. That kind of extremely-high-capital-cost ultra-specialized manufacturing, we probably should have been forcing to be at least partly on-shore for security reasons, even if it caused higher prices.
Same in percentage or in absolute numbers?
Absolute numbers. Which means we should be able to add even more capacity, faster than they did then, by a large multiple over a similar time period, thanks to productivity increases. Which, again, might be needed because demand is far higher than it was then (population's far higher, standard of living in material terms is higher) but kinda like how we can now produce more food than we need with low-single-digits percentages of the population working in food production, we can produce more with far fewer manufacturing workers than we had back then.
How much more productive are we? US employment in manufacturing peaked, in absolute numbers of workers, in 1979. In 2009, we produced about 50% more than in 1979, despite being well on our way to dropping to 1941 levels of people-in-manufacturing (sheer count, not percentage of pop) by that time.
My point with the comparison to 1941 is that we should have plenty of expertise around to increase production at a rate similar to the increases in the 6-12 months after Pearl Harbor, if we really needed to. IOW, at least a 50% increase inside a year, or probably about double our 1979 domestic manufacturing output (total, after the increase), and 1979 was solidly in the "the US is a manufacturing titan" phase of US history.
Again, however, certain specialized high-tech manufacturing might be an exception (chip fabs, for example). Supply of raw materials might also become a problem. Ability to build or restore/refit normal, industrial factories is not a place I'd expect us to be lacking in know-how, though, because we still do tons of manufacturing.
How much more productive are we? US employment in manufacturing peaked, in absolute numbers of workers, in 1979. In 2009, we produced about 50% more than in 1979, despite being well on our way to dropping to 1941 levels of people-in-manufacturing (sheer count, not percentage of pop) by that time.
My point with the comparison to 1941 is that we should have plenty of expertise around to increase production at a rate similar to the increases in the 6-12 months after Pearl Harbor, if we really needed to. IOW, at least a 50% increase inside a year, or probably about double our 1979 domestic manufacturing output (total, after the increase), and 1979 was solidly in the "the US is a manufacturing titan" phase of US history.
Again, however, certain specialized high-tech manufacturing might be an exception (chip fabs, for example). Supply of raw materials might also become a problem. Ability to build or restore/refit normal, industrial factories is not a place I'd expect us to be lacking in know-how, though, because we still do tons of manufacturing.
America was very different in 1941. The culture and demography have completely changed.
That's simply not true: https://en.wikipedia.org/wiki/Manufacturing_in_the_United_St...
Manufacturing in the US has imo been surprisingly resilient, and when it comes to components it's remarkably easy to order just about anything from a US supplier, perhaps electronics being the exception.
Europe only retains its place because of low labor costs in Eastern Europe. Western Europe is in real trouble after years of policy push for "Services Based" economies.
Manufacturing in the US has imo been surprisingly resilient, and when it comes to components it's remarkably easy to order just about anything from a US supplier, perhaps electronics being the exception.
Europe only retains its place because of low labor costs in Eastern Europe. Western Europe is in real trouble after years of policy push for "Services Based" economies.
>Western Europe is in real trouble after years of policy push for "Services Based" economies
I'm not sure where this narrative comes from because Western Europe is still industrialized, in particular compared to the US[1].
the industrial belt roughly from the UK midlands through northern France, Benelux, Switzerland, the Rhine-Ruhr area and South West Germany, Northern Italy and to some extent Spain is one of the most productive industrial regions in the world. [2]
[1]https://en.wikipedia.org/wiki/List_of_countries_by_GDP_secto...
[2]https://en.wikipedia.org/wiki/Blue_Banana
I'm not sure where this narrative comes from because Western Europe is still industrialized, in particular compared to the US[1].
the industrial belt roughly from the UK midlands through northern France, Benelux, Switzerland, the Rhine-Ruhr area and South West Germany, Northern Italy and to some extent Spain is one of the most productive industrial regions in the world. [2]
[1]https://en.wikipedia.org/wiki/List_of_countries_by_GDP_secto...
[2]https://en.wikipedia.org/wiki/Blue_Banana
Thank you for changing my mind on this one, the data clearly contradicts what I said.
I'm not European, but I have been living in Scandinavia for the last 4 years. I think I overgeneralized based on what I've seen here.
I'm not European, but I have been living in Scandinavia for the last 4 years. I think I overgeneralized based on what I've seen here.
When you say "that's simply not true", what do you mean by "that"? You linked to a general article with several data points.
When I said "very little", I of course meant relatively speaking. In my experience in buying industrial equipment, very little of it is made in the U.S. aside from things that would be prohibitively expensive (like heavy equipment) or things simply assembled in the U.S.
And in hearing conversations internal to companies that do have manufacturing, the general sentiment has been "not only can we not afford to make this in the U.S., we simply can't make it".
When I said "very little", I of course meant relatively speaking. In my experience in buying industrial equipment, very little of it is made in the U.S. aside from things that would be prohibitively expensive (like heavy equipment) or things simply assembled in the U.S.
And in hearing conversations internal to companies that do have manufacturing, the general sentiment has been "not only can we not afford to make this in the U.S., we simply can't make it".
> electronics being the exception
You say this like it's a minor thing. In fact practically any product of real value in 2022 has to include advanced electronics. What this means is that the US manufacturing capacity is, with a few exceptions, based on legacy products that have for some reason being difficult to offshore (I imagine big household appliances, etc).
You say this like it's a minor thing. In fact practically any product of real value in 2022 has to include advanced electronics. What this means is that the US manufacturing capacity is, with a few exceptions, based on legacy products that have for some reason being difficult to offshore (I imagine big household appliances, etc).
We do have a bunch of manufacturing knowhow, we still make things - just not consumer goods.
I am very concerned about the state of the economy in the near to mid term. Working class people are getting absolutely crushed by inflation and high asset prices. Many of the things people depend upon have a relatively inelastic demand (such as housing and transportation) and the money to pay for those things will come at the expense of something else. I feel that the "trickle up" effect is going to lead to low revenues, low profits, cost cutting, job loss, etc. across the board.
> I feel that the "trickle up" effect
What do you mean by this?
Corporations are posting record profits all while raising prices. It's greed pure and simple.
What do you mean by this?
Corporations are posting record profits all while raising prices. It's greed pure and simple.
They are, for now. Keep in mind those record profits are tallied in an increasingly devalued currency. So there is certainly a greed component, but it’s not the only factor.
The pain of the lower classes in society trickles up to higher classes as they constrict their spending, default on loans, etc.
In demand and highly compensated engineers may find themselves jobless and struggling if the economic pain carries on for too long.
The pain of the lower classes in society trickles up to higher classes as they constrict their spending, default on loans, etc.
In demand and highly compensated engineers may find themselves jobless and struggling if the economic pain carries on for too long.
Alternately, it's supply and demand.
All signs pointing to a stock market recovery:
- Decreased consumer savings - Decreased foreign savings
Plugged into the profit equation: https://www.levyforecast.com/assets/Profits.pdf
US corporate profits should be shooting back up
- Decreased consumer savings - Decreased foreign savings
Plugged into the profit equation: https://www.levyforecast.com/assets/Profits.pdf
US corporate profits should be shooting back up
Recovery from what exactly? The market as a whole hasn't gone down much.
S&P 500 is down 14% from its high at the end of last year, Dow is down 10%, NASDAQ is down 25%. Those are significant drops over a 6 month period.
On a historical valuation basis, the S&P is not cheap at all.
Of course, it depends on the course of earnings, where current estimates seem quite optimistic
Of course, it depends on the course of earnings, where current estimates seem quite optimistic
“Dow is down 10%”
“Those are significant drops”
It’s going to be hilarious when you kids see a REAL recession.
“Those are significant drops”
It’s going to be hilarious when you kids see a REAL recession.
those are well in the range of 'market correction' and not 'market crash', though. hell, those aren't even recession numbers.
had this discussion with my friend just last night when he tried blaming our current market on our current administration.
our ecomony was _heavily_ propped up by the fed during the pandemic. the market needed to correct itself eventually once the propping stopped.
had this discussion with my friend just last night when he tried blaming our current market on our current administration.
our ecomony was _heavily_ propped up by the fed during the pandemic. the market needed to correct itself eventually once the propping stopped.
I haven’t seen this mentioned yet…
The West coast Port Workers Association contract is being renegotiated and if I was a savvy buyer I would stock up inventory before and after the negotiation window instead of having my inventory stuck on a boat in the Bay Area. This obviously isn’t the whole answer, but a possible contributing cause.
Also there has not been a lot of coverage on this considering how big of a deal a strike would be if they could not come to terms. The most recent article was about 4 weeks ago according to a cursory google news search.
https://www.reuters.com/business/retail-consumer/us-importer...
The West coast Port Workers Association contract is being renegotiated and if I was a savvy buyer I would stock up inventory before and after the negotiation window instead of having my inventory stuck on a boat in the Bay Area. This obviously isn’t the whole answer, but a possible contributing cause.
Also there has not been a lot of coverage on this considering how big of a deal a strike would be if they could not come to terms. The most recent article was about 4 weeks ago according to a cursory google news search.
https://www.reuters.com/business/retail-consumer/us-importer...
I wonder if that means current inflation rates are probably COVID-inflated and will drop precipitously?
in which case maybe the Fed shouldn't raise rates as aggressively?
Or maybe there's not enough to really infer anything from this?
in which case maybe the Fed shouldn't raise rates as aggressively?
Or maybe there's not enough to really infer anything from this?
Not until we have returned to early 2019 levels of inflation should the Feds ease their funds rate increase plans in my opinion. Why lengthen this process if we don't have to?
Elections, they’re perpetually around the corner. See also, 1970’s stagflation.
So, we finally have some demand destruction for goods.
What about fuel, services, housing, and food? Is there an oversupply of those?
"Inbound container volumes to the US are reverting to pre-pandemic levels".
This does not sound like a problem.
This does not sound like a problem.
The big problem for the US in the near future is: the US dollar is suffering massive inflation. As this happens, they lose purchasing power, even compared to nations like China, and especially oil producing nations of OPEC.
This happens at the same time when China and their trading partners are looking to decouple from USD holdings, afraid of the threats made by the US. Don't be fooled, this is the beginning of a realignment where commodity exporting nations will start to privilege Asian countries and reduce their exposure to US/EU nations that will spend several years mired on stagflation.
This happens at the same time when China and their trading partners are looking to decouple from USD holdings, afraid of the threats made by the US. Don't be fooled, this is the beginning of a realignment where commodity exporting nations will start to privilege Asian countries and reduce their exposure to US/EU nations that will spend several years mired on stagflation.
This would make sense on the surface except the US dollar is strengthening against basically all currencies. Perhaps we’re inflating but everyone else is simply inflating far more.
This happens because the US is exporting inflation. That is, countries need to sell more of their local currency and use more USD to buy the same quantities of dollar denominated products, resulting in the USD going up. This is one of the reasons why they will try to decouple from the USD.
In the past, countries had no other option than to continue using dollars. Nowadays there is a growing group of nations willing to trade in other currencies.
In the past, countries had no other option than to continue using dollars. Nowadays there is a growing group of nations willing to trade in other currencies.
Maybe in Euros. Otherwise, I'll believe it when I see it. China's handling of its economy has not been stellar and I don't know that folks will be in a hurry to use RMB.
There's lots wrong with the dollar (or even the Euro), but... the alternatives aren't so great either.
There's lots wrong with the dollar (or even the Euro), but... the alternatives aren't so great either.
how do you find the data to support this? finance.google.com or similar?
just google "usd [country] exchange rate"
This isn't really supported by the data. Chinese inflation is comparable to US inflation and many other countries are experience worse inflation than the States.
What data in particular are you talking about?
US Inflation Rate (currently 8.3%) : https://tradingeconomics.com/united-states/inflation-cpi
Chinese Inflation Rate (currently 2.1%): https://tradingeconomics.com/united-states/inflation-cpi
I'll grant CPI is not necessarily apples to apples because how companies compose their weightings tends to vary heavily, but it seems like the most reasonable figure to look at that I can think of?
US Inflation Rate (currently 8.3%) : https://tradingeconomics.com/united-states/inflation-cpi
Chinese Inflation Rate (currently 2.1%): https://tradingeconomics.com/united-states/inflation-cpi
I'll grant CPI is not necessarily apples to apples because how companies compose their weightings tends to vary heavily, but it seems like the most reasonable figure to look at that I can think of?
Bond market perspective -- Chinese govt bond yields are basically the same as the US.
https://www.cnbc.com/2022/04/12/china-inflation-makes-it-har...
https://www.cnbc.com/2022/04/12/china-inflation-makes-it-har...
I don't see why you think these would be driven primarily by inflation.
US bond yields: https://tradingeconomics.com/united-states/government-bond-y...
Chinese bond yields: https://tradingeconomics.com/china/government-bond-yield
A note on their UI, the button to increase the scale is micro-sized and at the bottom of the graph. It can be easy to miss. But in any case, there seems to be little to no correlation.
US bond yields: https://tradingeconomics.com/united-states/government-bond-y...
Chinese bond yields: https://tradingeconomics.com/china/government-bond-yield
A note on their UI, the button to increase the scale is micro-sized and at the bottom of the graph. It can be easy to miss. But in any case, there seems to be little to no correlation.
https://www.xe.com/currencycharts/?from=USD&to=CNY&view=1Y
You can directly compare the 2 currencies against each other.
You can directly compare the 2 currencies against each other.
International exchange rates are affected by enough factors that it has little correlation to inflation. Notably, see the ruble:
https://www.xe.com/currencycharts/?from=USD&to=RUB&view=1Y
Russia is having significant domestic inflation (at about 18% currently), yet the ruble is currently the worlds best performing currency and stronger than it's been in years relative to the dollar.
https://www.xe.com/currencycharts/?from=USD&to=RUB&view=1Y
Russia is having significant domestic inflation (at about 18% currently), yet the ruble is currently the worlds best performing currency and stronger than it's been in years relative to the dollar.
Good news, hopefully folks have decided they don't need to buy more shit
i haven't bought anything but food in last 4 months, the only thing I bought before that was a table subsidized partially by work firm. i have this estimate/sense/quota whether if i've over spent recently, and if i splurge on something that quota gets filled that i spent too much and need to delay or let go of future non-essential stuff, but recently just paying inflated prices on grocery has been triggering that sense and therefore not really even considering spending on anything else. Really feel the difference when $30 gives you only one bag and not too long ago it was 4 bags worth of items. hell i'm eating more carrots and eggs now, just stings less to eat this then say fish which costs $9 for small piece, that you need two of per person to have sizable portion for one meal only.
The uh, entire economy of the world depends on some level that people are going to need to buy more shit.
Hence the catastrophic environmental damage that goes on every single day
They could shift to buying more services and less (not zero) shit, so this isn't necessarily true. Not that "dropping off a cliff" sounds great...
Yes, it's easy to read this as an "Oh no, our economy!" article, but it's not. It's an "Oh no, our sector!" article for people in shipping and consumer goods.
If you look at charts of consumer spending, the pandemic caused an explosion in spending on goods, while spending on services "dropped off a cliff". Now stuff is going back down to pre-pandemic levels. What are services doing? Climbing back to pre-pandemic levels: https://www.statista.com/chart/23574/consumer-spending-on-go...
Obviously, we "should" be about two years of growth higher than pre-pandemic levels, and I'm not saying the economy is 100% fine and dandy, but this article needs to be understood as being about a sector of the economy, not the economy as a whole.
If you look at charts of consumer spending, the pandemic caused an explosion in spending on goods, while spending on services "dropped off a cliff". Now stuff is going back down to pre-pandemic levels. What are services doing? Climbing back to pre-pandemic levels: https://www.statista.com/chart/23574/consumer-spending-on-go...
Obviously, we "should" be about two years of growth higher than pre-pandemic levels, and I'm not saying the economy is 100% fine and dandy, but this article needs to be understood as being about a sector of the economy, not the economy as a whole.
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What a well written, gripping analysis! One of the most interesting plots was the Ocean Booking Volume Index... booking volume vanishes right around the start of Feb each year. I think this is about when Chinese New Year is celebrated. That's crazy!! Every year, booking volume collapses for a few weeks for Chinese New Year, bottoming out at less than 1/2 the minimum during the most recent early 2022 Shanghai lockdown.
Perhaps one cause is inventory overhang, as Target now suffers from. https://www.axios.com/2022/06/07/target-prices-retail-invent...
I do not understand why this author needs to play the role of an economics expert. Please stay on the topic and report the facts. Consumer spending, inflation, rates etc are complex topics.
Would love to be able to find a new car to buy at a reasonable price.
I think that era's ending.
I guess the benefit, if there is one, is that expensive ICE cars make electric cars look less crazy-expensive than they did before.
I guess the benefit, if there is one, is that expensive ICE cars make electric cars look less crazy-expensive than they did before.
Massive implications if so.
I'm hoping it helps the transition to other forms of transportation. The US has hamstrung itself to being dependent on foreign autos and oil for nearly all necessary transportation.
The US has hamstrung itself because it won’t invest in domestic energy production, whether it’s lithium and nickel mines for electric battery production, or oil and gas production.
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An example of how some dealers see the situation:
A friend went shopping for new/reasonable car, and the Toyota dealer told them “See you in a few years!”
A friend went shopping for new/reasonable car, and the Toyota dealer told them “See you in a few years!”
And prices are rising? Looks like we need a Economics 101 …
I have noticed at the local grocery, they will strike out any old costs that are going down and they have a lot of them lately. Things are good
Working as intended. This will add a dip to offset the supply chain spike, biting into inflation.
Does anyone know a good way to access this sort of data (not using OP's SONAR service?)
dukeofdoom(4)
For many classes of bulk goods, freight was becoming 50-100% or more of total landed cost for goods imported from China, which overwhelmed labor cost differentials. In addition, Chinese production problems provided more reasons to move production closer to demand.
But US labor costs increased substantially during the labor crunch of 2021. Prevailing wages that were around $15 ramped to $18-22 as companies worked to compete against the likes of Amazon hiring hundreds of thousands of warehouse workers. Entry level Chinese wages have not increased nearly as much.
So if freight costs collapse such that the landed cost only has 25% of landed cost as freight, and US manufacturers have experienced an increase in labor costs relative to Chinese production, this could spell some very challenging times over the next 1-2 years as a recession applies cost management discipline on the supply chain and US manufacturers find themselves in potentially an even worse comparative cost position than pre-pandemic, vis-a-vis offshore production.
This is also why many US manufacturers were wary about adding capacity: they know about the bullwhip effect, and they also knew that it would affect not only consumer demand but also their supply chain advantage versus offshore production, and so any capital intensive capacity added to meet short-term demand may go idle 1-2 years afterward. And most manufacturing capacity doesn't pencil out if you only get a couple years of good utilization out of it.