You cannot ignore economic reality.

[Markpti]

Spent couple days at Piseco Lake on way through NY State, couple weeks ago. I did go by Rochester on the I 90
Might have taken you up on that offer if i had known.

I remember going to Montreal Expo games in my early 20`s. 4 guys would pile into the most reliable car of the bunch ( not saying much) - ( drive for 13 hours - party for 36 hours while seeing 2 games on weekend and then driving 13 more hours. The hard part was 4 of us all had to get the Friday off. Montreal was definitely a fun town and at that time, far ahead of its peers
in that dpt.

The door is always open to my fellow Kitco posters. Politics be damned.

[LongDonSilver]

The door is always open to my fellow Kitco posters. Politics be damned.

Used to go to Rochester, many decades ago, for business and when there were big companies in Rochester. I used to call on Xerox, Kodak, Rochester Products and a bunch of smaller companies. The Kodak Hawkeye plant on the Genesse River was designed by Frank Lloyd Wright, I believe. At that time I worked for a company just outside of Buffalo, home of the chicken wing, and the only football team that plays football in NY state.

We weren't "up state" we were out west!

You get the desire to travel to Albany for a coin show a bunch of us will treat you to a Polish platter at the Polish Center too.

Don

[vertical1]

I'll just drop this here

[brutus2]

When the new government statistics for CPI come out for June ( their definition of inflation)
do not be surprised to see that it has dropped from 4% annually to somewhere as low as 3%.
I am guessing 3.1%.
That is due to what is termed the base effect.
If one looks at the table below, one can see that June of 2022 was the high point of inflation,
A staggering 1.2% in a month
If you assume a .30% monthly increase in June then you would have to subtract .9% from the current year over year rate of 4% = 3.1%

There will be a lot of crowing and congratulations from the uninformed and the spin doctors.
Apparent to the informed, is that July and August of last year combined, only amounted to .2%, So if you assume a .3% increase in both these months the
rate will be back up to 3.5%. Even with this low rate the longer term rates will need to stay, or increase from where they are. (not good in a highly leveraged economy that is anxiously waiting for them to drop)
Many think that this base effect increase later in summer, will cause a resurgence in inflation ( like previous cycle) as higher rates will continue to increase costs and labour will continue to demand more to compensate for ever increasing costs. Any reduction in the US dollar and increase in energy prices will increase this likelihood. ( both are creeping a bit)

Higher rates need to reign in demand ( credit creation is its target and it is not happening to any great degree yet). I believe government deficits are the reason in large part

The chart below illustrates how we arrived at 4% inflation YOY up until May ( last report) and in the first column you can see each monthly increase.

Only present this just in case it is not reported in the press and hitting road again Wednesday for few weeks so probably not be able to comment when happens.

I think, like many here, that inflation is higher than what is reported, but even a 4% inflation rate would wipe out 50% of a persons pension in 18 years.

Note - there may be some small differences in the math as the monthly is seasonally adjusted and the annual rate is not ( leave it to the government).











Month Monthly Inflation Rate
(seasonally adjusted) Annual Inflation Rate
(not seasonally adjusted)

Month MR AR

May 2023 0.1 4.0
April 2023 0.4 4.9
March 2023 0.1 5.0
February 2023 0.4 6.0
January 2023 0.5 6.4
December 2022 0.1 6.5
November 2022 0.2 7.1
October 2022 0.5 7.7
September2022 0 4 8.2
August 2022 0.2 8.3
July 2022 0.0 8.5
June 2022 1.2 9.1
May 2022 0.9 8.6
April 2022 0.4 8.3
March 2022 1.0 8.5
February 2022 0.7 7.9
January 2022 0.6 7.5
December 2021 0.8 7.0
November 2021 0.8 6.8
October 2021 0.9 6.2
September2021 0.4 5.4
August 2021 0.4 5.3
July 2021 0.4 5.4
June 2021 0.8 5.4
May 2021 0.7 5.0
April 2021 0.7 4.2
March 2021 0.5 2.6
February 2021 0.4 1.7
January 2021 0.2 1.4
December 2020 0.5 1.4
November 2020 0.2 1.2
October 2020 0.1 1.2
September2020 0.2 1.4
August 2020 0.4 1.3
July 2020 0.5 1.0
June 2020 0.4 0.6
May 2020 -0.1 0.1
April 2020 -0.8 0.3
March 2020 -0.4 1.5
February 2020 0.1 2.3
January 2020 0.2 2.5

.

[ynot2k]

brutus2... I seem to be more in tune with effects on Social Security since it is the only income I receive that I don't generate myself. And as all know it got a bump at the beginning of year.

I wonder if it is known how many private pension plans have cost of living increases similar to SS. People with pensions that do not are truly getting harmed by even "small" amounts of inflation.

I have difficulty with many concepts around money and inflation. The recent inflation rate topped out in June 2022 at 9.1%, and has been dropping since.

If I think that the damage done by the 9.1% is permanent, do I have that right?

In other words, inflation rate has been dropping since then but if the June 2022 purchasing power of a dollar is used as a starting point... the lower inflation rate simply means that the subsequent purchasing power loss is on top of - or applied against - that low purchasing power amount point in time. It doesn't get better, it just gets less worse?

[brutus2]

brutus2... I seem to be more in tune with effects on Social Security since it is the only income I receive that I don't generate myself. And as all know it got a bump at the beginning of year.

I wonder if it is known how many private pension plans have cost of living increases similar to SS. People with pensions that do not are truly getting harmed by even "small" amounts of inflation.

I have difficulty with many concepts around money and inflation. The recent inflation rate topped out in June 2022 at 9.1%, and has been dropping since.

If I think that the damage done by the 9.1% is permanent, do I have that right?

In other words, inflation rate has been dropping since then but if the June 2022 purchasing power of a dollar is used as a starting point... the lower inflation rate simply means that the subsequent purchasing power loss is on top of - or applied against - that low purchasing power amount point in time. It doesn't get better, it just gets less worse?

Here is something from last year on subject about US pensions.

YOUR MONEY
Inflation is taking a big bite from retirees’ pension income
PUBLISHED WED, APR 20 20221:37 PM EDTUPDATED FRI, APR 22 202212:40 PM EDT
thumbnail
Greg Iacurci
@GREGIACURCI

KEY POINTS
Most pensions, unlike Social Security payments, don’t offer a cost-of-living adjustment that keeps pace with the current inflation rate.
State and local government pensions typically offer up to a 2% or 3% adjustment a year. Private-sector employers that still provide pensions, however, typically don’t offer a COLA at all.


So bottom line, unless the pension is Federal or you are of the rare breed and have a COLA pension, you are out of luck ( very similar in Canada)

The Feds know how to take care of their own.

Even then, the Feds manipulate the CPI rate so that the reported rate is actually lower than what it should be, as it is obviously in their interest to do so. It is far lower than if the same calculations of the pre Greenspan era was used. ( fact not opinion in that case)

You are correct, as you usually are, Ynot2k, in thinking that the CPI ( inflation) rate compounds.

In reality if the Fed thought a 2% target rate was appropriate and that rate ( in their opinion) was 2% from 2000 to 2020 but went up say 16% in past 2 1/2 years, then they need to have a 0 rate of inflation for the next 5 1/2 years to make things equalized. Fat chance of that. It will be 3.5% each year ( if we are lucky) compounding on that 16% ( my opinion). The only way we get the first scenario is a major economic meltdown and maybe not even then ( might result in opposite).

You just drown slower if you are trapped in a pit with water coming in and the rate of water slows down and you have no way of getting out.

[ynot2k]

Thank you brutus2

(quote not working) "...You just drown slower if you are trapped in a pit with water coming in and the rate of water slows down and you have no way of getting out. ..."

Well no wonder the game is "it's not raining until we say it is raining". Makes perfect sense.

[brutus2]

Looks like I am not hitting road until morning so a few more posts before then

Here is a great one about the US housing market, chalk full of very interesting data, charts, and analysis that is easy to understand.

It is an hour but any part of it is full of info.

It is from Wealthion. This one is trying to understand and analyze why housing market is only down nationally 1% and why it should be down far more to bring into equilibrium.
Basic premise is that it often takes a lot longer than it should for the market to rationalize pricing based on current conditions. 2006-2008 period prime example.

It looks at residential - nationally and in select areas.
Commercial
Air bnb
Rental both private and large companies.
Glut of new residential multi unit buildings being completed very soon.
Why there is a lack of demand and a lack of supply for single family homes ( basically a frozen market vs normal )
Home Builders and new vs existing ( home builders have filled void by offering 15% discounts and in some cases paid down mortgage financing. )
Valuations - historically - income basis and capex basis and rent vs ownership basis.
Trend in past 12 months and past 1 month and forecast for next 6 months.
Triggers for very negative results and possible but not likely events that would mitigate any negatives.
Lots more. You may find it useful Ynot2k if you have the time, even parts of it if not.






https://www.youtube.com/watch?v=-dJ7NLNiQGs

[ynot2k]

Looks like I am not hitting road until morning so a few more posts before then

Here is a great one about the US housing market, chalk full of very interesting data, charts, and analysis that is easy to understand.

It is an hour but any part of it is full of info.

It is from Wealthion. This one is trying to understand and analyze why housing market is only down nationally 1% and why it should be down far more to bring into equilibrium.
Basic premise is that it often takes a lot longer than it should for the market to rationalize pricing based on current conditions. 2006-2008 period prime example.

It looks at residential - nationally and in select areas.
Commercial
Air bnb
Rental both private and large companies.
Glut of new residential multi unit buildings being completed very soon.
Why there is a lack of demand and a lack of supply for single family homes ( basically a frozen market vs normal )
Home Builders and new vs existing ( home builders have filled void by offering 15% discounts and in some cases paid down mortgage financing. )
Valuations - historically - income basis and capex basis and rent vs ownership basis.
Trend in past 12 months and past 1 month and forecast for next 6 months.
Triggers for very negative results and possible but not likely events that would mitigate any negatives.
Lots more. You may find it useful Ynot2k if you have the time, even parts of it if not.






https://www.youtube.com/watch?v=-dJ7NLNiQGs

Thank you, I will check it out. I remember lots of multi-unit residential complexes being built before I left the US and I wondered at the time if it really would be 'bought up'. Apparently my thinking was not that far off.

I see Halbot posted the good news of happy days in the other thread. Confirms what I wrote a few minutes prior - that the fake data is being force fed to the masses.

[Markpti]

Used to go to Rochester, many decades ago, for business and when there were big companies in Rochester. I used to call on Xerox, Kodak, Rochester Products and a bunch of smaller companies. The Kodak Hawkeye plant on the Genesse River was designed by Frank Lloyd Wright, I believe. At that time I worked for a company just outside of Buffalo, home of the chicken wing, and the only football team that plays football in NY state.

We weren't "up state" we were out west!

You get the desire to travel to Albany for a coin show a bunch of us will treat you to a Polish platter at the Polish Center too.

Don

Thanks for that Don. Just went past Albany on the Thruway as we came back from the Kingston area today. I'll keep your invite in mind, for sure.