Posts
Select USA and check out that last chart.
Note the big jump in February. Some of this should trickle into February's CPI report due to be released on March 17th.
Keep the following in mind though.
We are constantly adding new categories of goods, but we do not cover 100% of CPI goods and services. The price of services, in particular, are not easy to find online and therefore are not included in our statistics.
Since there has been a bull market in commodities and unemployment is high, we would probably expect to see this index higher than one that tries to factor in everything. It currently shows an annual inflation rate of 2.79%.
I think this project goes a long way towards debunking sites like shadowstats. How can anyone possibly believe that consumer prices have risen roughly 8% over the last year in the USA? And have been doing so for nearly a decade? I sure can't.
Here's a look at car prices in particular. Cars are obviously a big deal in America.
I own a 1996 Toyota Camry XLE V6 4dr sedan. I could replace it with a 2011 Toyota Camry XLE V6 4dr sedan for roughly the same price I paid 15 years ago. Technically speaking, mine actually cost more back then but I also bought some optional equipment.
The government claims that new car prices have deflated roughly 3% since I bought that car. That works out to roughly 0.2% per year. I am completely comfortable with that statistic. Put another way, within 0.2% per year is close enough for government work. I suspect that there have been quality improvements that might justify that 0.2% difference. Other than some recent hiccups, Toyota is still trying to compete globally. I'd certainly be willing to buy a Toyota again.
Click to enlarge.
12 comments:
I found this link to fine tune my claim.
1996 Toyota Camry XLE V6 4dr Sedan XLE V6 (STD is Estimated)
Original MSRP: $25,038
The MSRP of the 2011 model is $29,470.
It's been 15 years. The price has gone up 17.7%. The government claims a 3% drop.
That's a 1% per year discrepancy. I would argue that much of it can be explained by quality improvements.
I'm seeing all kinds of improvements. For example, my car has one driver airbag and one passenger airbag. The new car has a driver airbag, a passenger airbag, driver side airbag, passenger side airbag, overhead airbag, and knee airbags.
My car came with cloth seats. I paid extra for leather. The new car comes with leather seats standard.
I'm sure there is much more if I bothered to look.
Mark,
Have you considered adding in the recent drop in median family income to your calculations?
If inflation is running 2% and median income drops 2%, you have a net loss of purchasing power of 4%. That can really add up over time.
I haven't done a lot of research on this, but Bloomie notes that household income has dropped at least the last 2 years.
Just something to think about.
It's actually amazing how expensive the camry was back then!
Mr Slippery,
If inflation is running 2% and median income drops 2%, you have a net loss of purchasing power of 4%. That can really add up over time.
It can indeed. I think we could very easily see more of it, especially if I am right about the long-term restaurant industry. Sigh.
There's also this.
Interest Expense on the Debt Outstanding
$169,361,712,628.99
Everyone seems to be parked in short-term Treasuries paying next to nothing.
$14.2 trillion only generated $169 billion in interest?
And pension funds are assuming 8% yields from their investments?
CP,
Mine did come with a few bells and whistles. It is metallic green, has simulated wood trim on the dash, gold trim, a spoiler, an alarm, a sunroof, leather seats, leather steering wheel, and the more powerful V6 engine.
Little did I know that it would be dubbed the pimp mobile. Hahaha!
My former car had a leather steering wheel too. It was a 1988 Hyundai Excel. The steering wheel practically rotted away before my eyes and I had to have all the cloth interior replaced by the dealer just after I bought it. Some of the fabric opted to change color in the sun. The transmission went bad at about 50,000 miles. That was a hefty bill. The alternator needed to be replaced multiple times. The extended warranty company went out of business but the dealer honored the work.
HYUNDAI - Hope You Understand Nothing's Dependable And Inexpensive
The leather in the 15 year old Toyota still looks brand new though. The interior is holding up extremely well. I've been happy with the car.
Everyone seems to be parked in short-term Treasuries paying next to nothing.
Well, one strategy to survive rising rates is to stay on the short end of the curve so you don't lose as much as rates rise and you benefit from higher rates with faster roll overs.
But it may have more to do with the ability of the Treasury to sell short term notes easier. The USA is essentially in a 4 year ARM by average debt maturity. A risky place to be.
Mark,
I noticed that in general, new car models are bigger than their predecessors. that's automatic deflation.
remy
Mr Slippery,
Well, one strategy to survive rising rates is to stay on the short end of the curve so you don't lose as much as rates rise and you benefit from higher rates with faster roll overs.
The sad part is that if everyone is doing it then there is no value there.
In the 1970s, short-term interest rates did not keep up with inflation. Had TIPS existed back then, investors would have been far better off owning them instead.
1970s Real Treasury Bill Yields
You can see from the chart why the concept of locking in long-term real yields appeals to me. You can also see why I'm willing to buy tax deferred I-Bonds every year. Even a 0% real yield might seem good someday.
The USA is essentially in a 4 year ARM by average debt maturity. A risky place to be.
I hear that. The government is my adjustable rate customer and I am the lender. But hey, at least my customer has a printing press. Sigh.
remy,
...that's automatic deflation.
Oh oh. You've enabled pun mode.
Perhaps it has been enabled by a manual transition.
I never seem to tire of puns.
A 1996 car? You decadent swine. Ours is 1994.
Hahaha!
It's a decadent pimp mobile! The ladies flock to it.
I wish I could remember how much extra I paid for the sunroof in dollars per year of enjoyment. It was money well spent.
I'll tell my girlfriend that ladies flock to my pimp mobile the next time we're out and about. She'll either agree with me 100% or give me a sarcastic eye roll. I think you can probably guess which one. Either way I'll get a good laugh though, lol. :)
Until two and a half years ago when I sprung for my first new car, a Sprinter van btw, I had owned about 12 cars or so. All were model years between 1980 and 1986.
I joked it was my quiet little way to hang on to the Reagan years.
Since moving out to Portland I don't have room for to collect cars anymore so I've moved on to bikes. I've got about ten bikes now. No sell discipline.
Post a Comment