** 13-Nov-2021 World View: Analysis of CPI data
Last week, the Labor Department said that the October consumer price
index was up 6.22% year over year, which was higher than many people
had expected.
This has led to new rounds of hysteria, as some people are claiming
that we're returning to the hyperinflation of the 1970s, something
that I've said many times is impossible, based on the level of debt.
*** 11-Oct-2021 World View: Explaining hyperinflation
***
viewtopic.php?p=64969#p64969
I've updated my table of historical CPI data from 1914 to the present:
http://www.generationaldynamics.com/pg/ww2010.i.cpi.htm
If you look at the data for 2021, you see the following:
2021:
1.40, 1.68, 2.62, 4.16, 4.99, 5.39,
5.37, 5.25 5.39, 6.22
That seems high, but now look at the period 2007-2009:
2007:
2.07, 2.42, 2.80, 2.58, 2.67, 2.71,
2.36, 1.96, 2.76, 3.52, 4.32, 4.06
2008:
4.30, 4.03, 3.94, 3.92, 4.18, 4.99,
5.60, 5.38, 4.93, 3.67, 1.06, 0.11
2009:
0.02, 0.23, -0.37, -0.73, -1.27, -1.42,
-2.10, -1.48, -1.29, -0.18, 1.84, 2.72
If you compare 2021 to 2007-2009, you can see that we're running
slightly higher than in 2008, but nowhere near the hyperinflation of
the 1970s.
Why is inflation higher now than expected? These are the reasons
usually given:
- With the Biden administration paying people not to work, a lot
of people have not been working.
- The result has been particularly a shortage of truck drivers.
- This has caused backups in the California ports in goods being
shipped from China, intended for retail stores for the holiday
season.
- This has caused empty shelves in many stores, with prices rising
for the goods that are still in stock.
Hysterical analysts are saying that the current high prices will never
come down. Even if that's true, it's still 0% inflation if they
merely stay the same.
But now imagine how things will look in January 2022:
- People will have gone back to work, since the Biden handouts
will have ended.
- Even truck drivers will have gone back to work, in order to feed
their families.
- With the holiday season over, the flood of products into the
California ports will have slowed substantially, and the backups will
have eased.
- Many of the goods that were stuck in ships offshore will finally
make it into retail stores, too late for the holiday season.
- So the post-holiday sales will result in price cuts deeper than
in pre-pandemic years.
- People will be on their post-holiday diets.
So there's every reason to believe that the CPI will fall sharply in
2022, same as in 2009, and there's no reason to believe that the CPI
increases will continue as they did in the 1970s.
