“The kind of inflation now is driven by the fact that there aren’t enough used cars, that the oil markets are rocking and rolling, that housing construction demand is high and there’s been trouble getting sawmills up and running.”
The economy is rebounding. I hope it stays this way. Who knows if it will with this new super-duper scary COVID variant!!
Anyway, consumer prices went up by 5.4% from last July. It is the same pace as June but “the highest 12-month rate since 2008.”
The consumer price index (CPI), which excludes the volatile energy and food sectors, increased by 4.3% from last July.
So we still have inflation, but a few parts of the economy saw a deceleration in this latest report. That might help:
Sharp decelerations in inflation in select areas of the economy that had seen rapid price increases in the spring helped keep the headline numbers in check.
Used car and truck prices, which rose rapidly between April and June as Americans looked to vacation, gained just 0.2% in July after a climb of more than 10% in the prior month.
Apparel prices were flat after a 0.7% increase in June, and transportation services prices actually declined after a pop of more than 1% at the end of the second quarter.
The GDP increased by 6.5% at an annualized rate in the second quarter. Consumer spending hit an 11.8% pace.
It’s great people are getting out and about and spending money. Gotta fuel the economy! Remember, the consumer drives the economy. Well, they should. (#EndTheFed)
However, it’s still hitting companies all at once. They cannot keep up with demand (emphasis mine):
Booming demand as the economy reopens has outpaced the ability of businesses to keep up. Many companies are passing on higher labor and materials costs to consumers. The shortage of semiconductors that has crimped auto production has caused prices to soar for new and used vehicles, as well as rentals.
“The kind of inflation now is driven by the fact that there aren’t enough used cars, that the oil markets are rocking and rolling, that housing construction demand is high and there’s been trouble getting sawmills up and running,” said Christopher Thornberg, founding partner and economist at Beacon Economics.
I listen to a lot of baseball on the radio. A constant commercial from Toyota stresses dealerships will buy your car even if you do not buy a car. They will also take any brand of car.
Most people know this can happen at any time, but I know some people think it will only happen if you buy a car. Maybe some places have that policy.
But the demand for used cars has gone through the roof. Car companies now emphasize the policy of buying your vehicle no matter what.
We hear about Democrats crying out eviction and awful landlords. One landlord told The Wall Street Journal about people fighting over units in central Pennsylvania:
Adam Tannenbaum was surprised when tenants proved willing to accept recent rent increases on the order of 10% or more a year for the workforce housing units his company owns in central Pennsylvania.
He was stunned when a bidding war broke out over a Columbia County, Pa., unit in May. “We advertised it at $725 thinking the economy’s not that strong out here. Well, it got up to $950—that’s when I stopped it,” said Mr. Tannenbaum, a managing principal at the Denali Cos., a workforce housing investment firm. On top of that, the winner was also willing to pay six months up front plus a security deposit before moving in.
“I don’t know where these people are getting their money from, but there’s a lot of money out there and there’s definitely a shortage of these very standardized workforce units,” he said. And, he added this is in “places where employment drivers are usually a university or an Amazon warehouse.”
They have money because the pandemic likely forced them to save money. I know I spent less last year.
Overall, it will likely even out soon. But we all know what is coming up! CHRISTMAS!DONATE
Donations tax deductible
to the full extent allowed by law.