Paradoxically, inflation has contributed to me taking a sabbatical. While I live in a LCOL area and made ~140k/year it just no longer felt worth it to work as I saw my retirement accounts start to match and exceed my salary in yearly gains. I do plan on going back to work in a part time manner, but inflation has killed any reason for me to work hard at a job for that level of salary. Furthermore, the feeling of "what's the point" around white collar work has never been more intense.
I don't think that OP meant to say their wage income was low.
I think OP means that once their investment returns starts exceeding their wage income, their motivation for continuing to work drops.
Which, I kinda get. If you don't really like what you're doing, it's harder to stay motivated at continuing to work when your bag of money makes more money than you do.
It sounds like OP is already planning on some amount of return to work, which may be necessary because that exact point (investment returns > wage income) isn't necessarily a safe point to retire. But it might be, depending on how much you spend, and what your not-employer-funded healthcare costs are.
Y"eah, the same reason we're going to have a trillionaire soon is why even if someones making a great salary, their 401k is inflating faster than they need to earn a living in a low cost of living area.
Absolutely absurd, but if you got the upswing between 2010-2020, you might be in an upper class while still living in lower class, meaning your 401k is all you need to survive on while the billionaires continue to pump the market as a defacto monetary instrument and leave the dollar for the poors.
Think of it like bitcoin, but instead of owning electronic worthless hashes, you own LLCs that own stocks and take out loans on behalf ot he LLC against those stocks.
Then you just trade those LLCs around as tokens of wealth.
Hourly wage for all private sector workers is up +32% since Dec 2019 ($37.54 vs $28.38)[1]. For non-management workers +35% ($32.31 in May 2026 vs $23.85 in Dec 2019)[2].
I'd say almost no one gets a 30%+ increase staying in the same company. There was a short period between 2019 and ~2022 when tech was hiring like crazy and you could just hop from job to job for huge increases every 6 months to a year.
The problem is that is now over, and so wages are back to being suppressed again.
It means you already had the paycut, you need to have at least %4.2 rise + reimbursement to make even.
In high inflation countries you often get a revision every 2-3 months and you get a rise that is higher than the official inflation, as a result this solidifies the inflation and boosts the economy as everyone immediately buys whatever they can before it becomes more expensive. It's a vicious cycle.
Not necessarily, depends on the distribution of your own expenses. If you deviate from the average urban household (lets say, you have a particularly long commute or your car isn't as fuel efficient as the average. Look at the increase on fuel prices, 40.5%!).
If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
>> If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
This is the problem with people treat CPI as some word from the heavens...it is not. CPI is a highly constructed figure which conveniently includes/excludes things and is really more a floor of what the inflation is. Anyone living in the real world knows experienced inflation is way higher.
> CPI is a highly constructed figure which conveniently includes/excludes things and is really more a floor
It’s an attempt at a central tendency in a complex economy with non-linear variability.
> Anyone living in the real world knows experienced inflation is way higher
Here is a map of wage changes across the U.S., 2024 to 2025 [1]. Lots of variance! If you’re on the West Coast, right now, you’re seeing above-CPI inflation. If you’re in the Northern Rockies, where I am, you’re seeing less.
Typically, you need a little more to make up for the difference in how much more taxes you pay at the marginal end vs the average for your total income...
The median earner with a standard deduction would need a ~4.7% raise to stay even...
"Inflation" is also increasingly distributed unevenly. The top 10% continues to make up a larger and larger portion of spending. It is entirely possible for ~4.2% inflation to be substantially higher (or lower) for the median household than the overall reported number.
Most of the relevant numbers in the American tax code are inflation adjusted, but not all of them. The biggest ones for people on this website are probably the value of the Child Tax Credit and the thresholds at which the Net Investment Income Tax/Additional Medicare Tax kick in.
I think the point is the tax brackets are supposed to be inflation-adjusted. So all the brackets go up 4.2% too. Idk if the implementation details make this actually work out 1:1 but that’s the idea.
Much more since the numbers are cooked anyways. Car model N cost 10k, and car model N+1 costs 15k, if N+1 has 2 more airbags, one more gear, a keyless starter it will be counted way under 50% inflation, even though you pay 50% more.
Most of the average joe's money is spent on housing + food + energy these things are all way above the calculated """average""" inflation
They're not necessarily "cooked," (but they certainly can be). Inflation is genuinely hard to calculate since it's different for everyone, goods and services purchased drift over time, and as you mentioned, that exact good also changes over time. CPI (and others) are more useful in a MoM or YoY context. At 10 years, it's better viewed as best guess cost of typical living rather than an economic indicator comparing apples and oranges.
> housing
This is actually the hardest to get right because it's the largest, and 2/3 of Americans own homes, so part of their costs are fixed.
No it's cooked. For high tech items, they assume that improved technology means you are getting more for your money even if the price goes up, so they discount it. It's true that you get more for your money, but it ignores threshold effects, like you just can't buy an equivalent phone for $10 even if todays phone's are 200x better.
Then there's the "owner's equivalent rent" BS and this is 25% of CPI. It answers the question "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished, and without utilities?" It assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent.
A conversation with your boss about a COLA raise really shouldn't include your own personal finances. "I just bought a house" is not a good reason for a raise; "prices in our area have increased" is a much better one
True, but how inflation affects each person is different. This isn't a good measure, but it is the best we have, and usually close enough to the truth.
In most cases, you are granted a notional dollar amount that is immediately turned into a concrete and fixed number of shares that then vest over the next 4 years.
Then, any share price appreciation on the shares is captured by you at vesting, rather than being paid in cash (the value of which has been inflated away) and then purchasing shares/index that has risen in the last 1-4 years.
If you are paid in cash, you will be buying fewer shares per dollar (and per year) rather than getting the same number.
I've known a few people who lost everything when the company went bankrupt. (most died of old age when I was a kid - before pension reform companies often did put your retirement in the company stocks)
How is it inaccurate? If I only care about buying apples, and apples get 10% more expensive, and my salary only increases by 5%, then I can't buy as many apples as I could have before. How many apples I do actually buy in the end is irrelevant to the calculation.
The person you're replying to erroneously interpreted "stay even" as "avoid going into debt," instead of your income's purchasing power remaining constant.
Consumer price index is about consumer goods. This is why tarrifs and such are considered regressive - they hit people harder the less money they have because a larger percentage of their spending is consumer goods.
If I invest half my income and spend half my income, and the prices of goods goes up 4.2% and my income goes up 4.2%, then I've made progress; I'm now investing more than half my income, because the half of my income I was spending has stayed even and the half I was investing has increased.
Here are some N-year rolling total inflation charts to put this datapoint in a longer-term perspective: https://totalrealreturns.com/inflation . Zooming out always smooths the noise.
> Prices are up +4.25% in the past year, and +24.49% in the past 5 years, according to the latest CPI data released Jun. 10, 2026. The price level has approximately doubled (2.01x) today compared to August 1999.
Not knowing if that's good/bad, as it is without any frame of reference, so the same data for Spain looks something like this:
Prices up +3.2% in the past year, up +22.4% in the past 5 years. Compared to 1999, a 1.88× difference, and if you want to compare since when it doubled, it'd be around September 1996. This is according to a tool from INE, Spain’s national statistics: https://www.ine.es/varipc/index.do?L=1
Can you really say that based only on the inflation? What if wages increased 6%, then 3% inflation wouldn't be as bad as if inflation raised 2% but wages only increased 0.1%? At least if you think about purchasing power I suppose. But won't claim to be an expert on this, happy to be educated by those who are :)
In general, higher inflation has a negative impact on consumer sentiment even if wage growth matches the inflation, which it rarely does.
But the bigger issue is that inflation is generally distributed much more evenly than wage increases. Very few employers offer a COLA that is automatic, so wages almost always trail inflationary pressure.
It's fine as long as t-bill rates match or exceed inflation. Then you can avoid losing purchasing power by just putting your money in the world's safest investment. Over the past century, t-bill returns have slightly exceeded inflation on average, though there have been periods when they didn't.
Stash paper cash in your safe and sure, you lose purchasing power. Use fiat money the way it's designed to be used, instead of using it like gold coins, and it works better.
Why is that not good? When inflation is close to 0 real interest rates increase which causes the economy to slow down. It seems clear to me that the optimal rate of inflation is always above 0.
The real problem imo is that below 0% is really bad, and has the potential to spiral. So the fed does not target anything close to 0%, but instead targets some buffer above it.
So it's not that "2% is good", but more that "2% is the best buffer we've decided above the <0% super scary threshold"
Inflation isnt as simple as good/bad. Monetary theory shows us that short term inflation is a good way to counteract spikes in unemployment. Whether you prefer stable inflation with swings in unemployment or stable unemployment with swings in inflation or something in between is a political question.
That shows that it’s been since 1991 since we saw similar five year increases in prices. Which is a long time. You also have to be careful not to zoom out so far you get into the “we all die anyway” scale where you’re not really tracking things that are meaningful to on-the-ground, as-lived reality
1918 isn't very relevant to modern living. And nobody wants to go back to the stagflation of the 1970s. And that scale is logarithmic.
Graph it without the logarithmic scale and draw a curve through the 1982-2018 data and the recent spike will explain why people are complaining about it.
Indeed. Back then food and shelter comprised a much larger % of the average income, and so each percentage point of inflation was considerably more painful than it is now.
Zooming out in what sense? Those rolling charts don’t mean much imo. Year over year change is a pretty good perspective and a tick up like this is not great.
I am not sure what the perspective is: we aren't the same economy (there are true financial system differences between now and say, 1985) and, even if we were the same, the three other shocks that rise like this are two world wars and an oil crisis. This is some dunderding old narcissist thinking he's the toughest kid on the block. You could argue the oil crisis was a similar result of the US never, ever learning a lesson about intervening in others' political systems (especially if there's oil involved), but trend line or not, no one had to go through this.
And the trend line would bend differently if we could just learn the lesson.
And yes I am oversimplifying: the current conditions are actually do to a number of stupid things the current administration did because they assumed everyone who came before them was stupid and woke, but this just strikes me wrong, as though the chart should be comfort to someone struggling to make rent or pay for medicine or what have you. Much of this could have been avoided.
Up 4.2% (2.9% core, i.e. stripping out food and energy) over the last 12 months before seasonal adjustment.
The higher-frequency data are more concerning. CPI “increased 0.5 percent on a seasonally adjusted basis in May, after rising 0.6 percent in April” and 0.9 percent in March [1]. (0.3, 0.2, 0.3 percent for December, January, February, respectively.)
So a linear trend of 6% from March, closer to 9% if one extrapolates the March-April-May quarter. Almost all of that driven by food and energy. Core spiked to 0.4% MoM in April, but calmed down to 0.2% in May, on trend with pre-war numbers. It’s up 2.9% YoY, but trending a bit lower. (Looked at another way, we’ve already “booked” 2.5% of inflation for ‘26. If we continue at 0.5% MoM, we close the year +5.6%. Even if it drops to pre-war 0.2%, we’re still going to be +3.8%. Given the resumption of hostilities, I’m betting we’ll be closer to the former.)
Together with the jobs numbers, it would be weird for an independent Fed to not raise rates.
Prices have doubled since 1999!? Restaurant prices near me have doubled since 2015, easily. And that's not counting delivery going from free to 25% of the meal cost.
Except for a brief spike during Covid unemployment has been below 5% for a long time which has led to more wage growth for cooks and waiters than for programmers.
Not quite. The value of the currency has declined by 33% since 1999.
Prices are subject to the combination of the value of the currency and the value of the good. Food may be worth more than in the past, for example, so you cannot look at the value of the currency alone.
Value is always relative. Typically currency is what we use as the relative point of comparison, but obviously you cannot compare the value of the currency with the value of the currency. Hence why we flip things around. A bag of goods, as opposed to a single item, filters out the noise of each individual good changing in value independently.
Quite the opposite. Value is essentially a function of scarcity relative to desire. Food desire may be, for all intents and purposes, stable, but availability is most certainly not. Something like a major weather event wiping out a crop can quickly change the scarcity profile. Food is especially prone to value variances over time.
Also, desire for restaurant service is driven by people with disposable income looking to treat themselves much more than baseline food prices. Restaurants serving this demand can optimise prices for their limited capacity, and have staff and real estate costs to consider
What specific definition of value are you using here? Sometimes terms with value get into the same realm as price, but the default definition of value is the benefit you're getting, and going to similar restaurants ten years apart is damn near the same benefit. Scarcity doesn't come into play.
Given that we're specifically talking about value in the context of currency and how that pertains to CPI, I am not sure where "benefit you're getting" would apply. CPI is definitely not interested in "the benefit you got".
However, if we are to change gears, the benefit you get out of a restaurant isn't constant either. Aside from maybe those trying to serve the elderly population, where there seems to be a viable niche of providing "remembrance of how things were in the good old days", restaurants that try to offer constant value quickly go out of business. They are forever needing to up their game to appeal to the typical clientele. Customers want increasingly more benefit as time marches forward to justify the visit.
An individual's perception of benefit is personal, so it is true that any given individual may not find increased benefit in restaurants trying to outdo each other by offering more and more benefits, but within populations it seems quite apparent that restaurants that "win" generally are offering more benefits (higher quality/more exotic/creative food, increasingly sophisticated ambiance, etc.) than they did in the past.
> Given that we're specifically talking about value in the context of currency and how that pertains to CPI, I am not sure where "benefit you're getting" would apply. CPI is definitely not interested in "the benefit you got".
...yes it is? It's seeing how many dollars you need for some specific goods.
> the benefit you get out of a restaurant isn't constant either
It's not exactly constant but it's pretty close. Especially over a single decade.
Not all components rise in cost at the same time. Overall, prices have roughly doubled since the early 2000's--things that I expect to cost, say, $10 would now cost around $20. However, some things have risen in cost much more quickly: housing prices, for one.
The things you are talking about are a phenomenon largely of the COVID era and later. The biggest wage gains post-COVID have been in the lowest end of the job market, and services where almost-minimum-wage labor is a high fraction of their cost have commensurately risen in price the fastest (e.g., fast food). Similarly, a lot of the easy money flowing into unprofitable grow-then-make-money businesses (like delivery firms) have stopped flowing in, so those services have had to actually make money from customers, which causes their costs to rise.
It's more the messenger than the message. Or in this case the people funding and staffing the messenger, and who desperately need this number to be as low as possible.
It's unfortunately not limited to the current administration. We've had the government telling us to not trust our lying eyes about inflation at least since the Biden administration. At the time government officials were reassuring everyone that there wasn't inflation while everyone could see the prices going up everywhere.
Not so much THIS report, but you can't trust any data that the Trump administration puts out after all the blantant corruption. Remember the Sharpie on the hurricane chart?
But if you look at the sibling comment, all of that came from "Food away from home ". In other words, it's all because of takeout/restaurants, not groceries. Those were actually dragging inflation down.
Distributor fuel costs are a really small part of the food price, with the notable exception of things that are bulky and full of air like Cheerios. The overwhelming fuel component of grocery consumption, by a margin so large you can consider it to be 100%, is the consumer's fuel. Driving 5 miles to an American grocery store to buy a few pounds of food is the most absurd scheme ever hatched. Having your groceries delivered by a van on a route is much more efficient but, perversely, by internalizing the last mile fuel cost that would show up as higher prices for food in aggregate inflation statistics.
Some businesses use that as cover to increase prices even when their costs may not have actually been affected by the price of energy. Never waste an opportunity to put the big squeeze on.
Steadily rising prices will be the norm from now on. What will be interesting to see is how fast the corporate elite figure they can boil the frogs without them noticing too much.
Is this of any significance? I would imagine most people are like me: we shop based on quality and price and where we want something on that curve. Whether someone raises the price on me “because of inflation” or “because we want to make more money” is indistinguishable.
A rationale for the price rarely affects my choice. If I don’t want to buy something for a price, explaining that the guy won’t be able to survive without pricing it that high won’t get me to buy it. If I do want to buy something for a price, explaining that a guy is charging a hefty profit won’t get me to not buy it.
The only thing that will get me to buy it or not buy it is if it is at the point on the price/quality frontier where I want it.
> A rationale for the price rarely affects my choice.
This would make you the exception.
Companies are constantly increasing prices to see how much they can charge consumers before they feel cheated and stop buying and/or enough customers get priced out to hurt profits.
Consumers tend to feel ripped off if they think a price increase was due to greed but are way more forgiving if they think the price increase was needed because of something outside of a company's control. That's why companies are quick to tell consumers that rising prices are due to things like fuel prices, bird flu, or supply chain problems.
Of course, that tactic isn't as effective as it used to be since consumers have seen companies using those excuses and feed them lines like "We're all in this together!" while those same companies report skyrocketing profits and they've watched as prices remained high or even increased even after the blamed fuel prices dropped and supply chain issues resolved.
A small number of companies control the meat supply in the United States. If you decide that you don't want to buy that $50 hot dog, you likely won't have many comparable options.
This cannot be emphasized enough. The rise in egg prices was such a thing. Avian flu was an impact, but not to the degree that egg prices increased. Those producers are reporting record profits.
Remember this is the number the Government is measuring and reporting. The "real" inflation that every day people feel in their wallet is significantly higher.
Because people can’t internalize regional variance. So since the beginning of time, it’s not noticed when the national number is higher and fraud when it’s lower.
Americans spend a significant portion of their income on food and fuel, which are excluded. Historically, these together accounted for about 15% of their income, probably up to 20% after recent price increases.
Because they basically pick and choose what's in there.
If you sat down and did the math on what it costs someone to pay rent / mortgage, car insurance, health insurance, daycare, schooling, going out to eat and drink, doing anything for entertainment, go to the grocery store.. it's not a debate that the real inflation is significantly higher all the time than what is used to measure the number.
U.S. consumer wages index down -1% this past three months. also. We almost briefly started climbing positive in January, but nope, another 1% drop, sigh.
See also the +25% inflation / -1.2% net wages after inflation over five years chart here, for those unfamiliar with how inflation % press releases are misleading over time. If household spending power is -1% after +4% inflation, then that inflation probably isn’t healthy for your country’s economic future, etc.
(I also suspect the wage index itself is disguising about the total wages paid index dropping like a stone, but haven’t done the math to chart it yet myself yet.)
Worse is coming and the markets seem to be in complete denial about it.
Oil has only really maintained the ~$100/barrel price because of record SPR releases worldwide. Also, that $100 price is kinda fake because it's a future price. The spot prices got much higher. Well, that runway is coming to an end. If the Strait of Hormuz re-opened today , we'd still be facing an energy shock. Plus there's famine coming.
Now the US won't run out of oil or refined petroleum products. The uS is now a net exporter. But it's a global marekt so the prices are going to go way up. And some countries and heavily dependent on oil for electricity. They are going to face blackouts.
So even though fertilizer shortages are skewed towards the Global South, food prices too are global so they're going up too.
In 1973, the energy shock took ~6 months to manifest [1].
But I think the real problem is dynamic pricing. Inflation is insidious. People start raising prices on the expectation of rising prices, thus causing prices to rise. But so many industries now are going well beyond that by essentially colluding through AI tools (eg RealPage) to further raise prices.
I honestly don't know how this ends without a deep, long recession.
The Iran conflict will continue on a low flame (occasional pinpricks like now) forever.
It serves the US Energy Dominance Agenda against China, Japan, India and the EU.
The Trump administration does not care about "its" population. There were already rumors early in the Trump term that Trump would not mind a recession so that his real estate cronies could buy cheap foreclosures.
So it is all a double win for the oligarchs. The stock market is still fine, nothing else matters.
That is ascribing far too much strategic thinking to this administration. They're just not capable of the kind of planning and foresight that would require.
The administration's planning is much more along the lines of, Will this look cool when they announce it on Fox News tomorrow? If you think there's much beyond that, you're ascribing strategic clarity where there isn't any. They're continue to flail around and TACO until they have a result they can present to MAGA loyalists as a success, regardless of actual merits.
It's not a question of ethics. It's a question of competence.
I mostly agree with you, but I do think they’re highly skilled at taking advantage of whatever messes they cause. “Chaos is a ladder” might as well be the theme of this decade.
It's not the administration doing the strategic thinking. The administration is entirely reactive and straightforward to manipulate -- if you have money.
The people with strategic goals just send money and compliments and the administration does what they want.
I would not underestimate the figures in the background. Trump and Hegseth are clowns of course, but they don't make policies.
The energy dominance model was already floated by Trump in his first term. He was the most vocal critic of Nordstream long before the Ukraine war. Biden couldn't push so aggressively because of the green agenda but dutifully shut down Nordstream and made the EU dependent on US LNG.
Now with the oil barons in power, there are no green agenda limitations and the long term plan (which is 100% not from Trump himself) can accelerate.
Look how they already make the EU and Japan rearm with all these levers (they should rearm, but for the purposes of keeping waterways free from whomever blocks them ...).
If this ends up being the case, 15 years from now we might look back at this as the catalyst for supercharging the energy transition across the world ex-US.
That doesn’t make sense. In the medium term this will strengthen efforts in China, Japan, India and the EU to move away from fossil fuel dependence much more quickly.
> with the Iran conflict, Qatar is shut off and Japan can be pressured even more
I see your argument. It’s still short term. A fifth of Japanese electricity comes from renewables [1]. Meanwhile, Japan is diversifying its LNG suppliers [2].
I can believe the US/UK oil companies believe that.
It may even be true, because the energy transition caps the entire future opportunity for oil/gas sales, and all the producers have been trying to capture a larger share of that pied for the last 2 years or so.
But this intervention is so heavy-handed that it is visibly destroying that future market. It looks like all oil companies will lose a lot because of it, US/UK ones included.
> The Trump administration does not care about "its" population.
Yes, he's trying to govern like an oligarch. We will see in November if this was a good choice or if the US is still too democratic for this to work. Or earlier if he tries to avoid that test.
With respect to those numbers, I remember this recent accusation of price-fixing across 2019-2021 [0] that might have an effect, although I also have reservations about how much to trust anything coming out of the rotting US Department of PresidentsPersonalLawyers these days.
The Iran war is for sure a huge part of that (just look at the energy cost inflation!), but other elements are a factor too. "Months ago" is really not that long when it comes to inflation.
Paradoxically, inflation has contributed to me taking a sabbatical. While I live in a LCOL area and made ~140k/year it just no longer felt worth it to work as I saw my retirement accounts start to match and exceed my salary in yearly gains. I do plan on going back to work in a part time manner, but inflation has killed any reason for me to work hard at a job for that level of salary. Furthermore, the feeling of "what's the point" around white collar work has never been more intense.
I don't understand this point of view. $140k in a LCOL is a fantastic salary. Median US household income is $83k/yr.
It feels more likely your investment account gains are driving your decisions. Stock gains are also driven by inflation though!
I can sort of understand the feeling though, I just recently got a 2.5% raise for "inflation", which hardly feels like it's making a dent.
I don't think that OP meant to say their wage income was low.
I think OP means that once their investment returns starts exceeding their wage income, their motivation for continuing to work drops.
Which, I kinda get. If you don't really like what you're doing, it's harder to stay motivated at continuing to work when your bag of money makes more money than you do.
It sounds like OP is already planning on some amount of return to work, which may be necessary because that exact point (investment returns > wage income) isn't necessarily a safe point to retire. But it might be, depending on how much you spend, and what your not-employer-funded healthcare costs are.
Y"eah, the same reason we're going to have a trillionaire soon is why even if someones making a great salary, their 401k is inflating faster than they need to earn a living in a low cost of living area.
Absolutely absurd, but if you got the upswing between 2010-2020, you might be in an upper class while still living in lower class, meaning your 401k is all you need to survive on while the billionaires continue to pump the market as a defacto monetary instrument and leave the dollar for the poors.
Think of it like bitcoin, but instead of owning electronic worthless hashes, you own LLCs that own stocks and take out loans on behalf ot he LLC against those stocks.
Then you just trade those LLCs around as tokens of wealth.
Welcome to the great new oligarchy.
You're still cutting your annual income in half though. That's pretty big no?
Are you assuming yearly wages not increasing to match/exceed inflation every year?
The logical point here doesn't make much sense to me otherwise.
Cumulative inflation since 2019 has been 30%. More with these new numbers, I think.
What jobs have the wages gone up 30% in that same time period? I’m sure a few, but not many.
Hourly wage for all private sector workers is up +32% since Dec 2019 ($37.54 vs $28.38)[1]. For non-management workers +35% ($32.31 in May 2026 vs $23.85 in Dec 2019)[2].
[1] https://fred.stlouisfed.org/series/CES0500000003
[2] https://fred.stlouisfed.org/series/AHETPI
I'd say almost no one gets a 30%+ increase staying in the same company. There was a short period between 2019 and ~2022 when tech was hiring like crazy and you could just hop from job to job for huge increases every 6 months to a year.
The problem is that is now over, and so wages are back to being suppressed again.
In the tech industry? Absolutely they have not, and in fact have likely gone the other way.
Unless you're maybe one of the few specialists in deep learning, CUDA, etc.
There's been mass layoffs and downward pressure on compensation all over.
Also is having twice as much money (1x from interest and 1x from income) not a benefit?
Maybe you are the strawman consumer that skeptics point to in guaranteed basic income debates, who just stops working because they get a check.
I feel the same. Investments are shooting up and wages stink.
UK has very high taxation now so working full time doesn’t bring in as much as a decent portfolio.
Remember this next time you get your yearly review/raise. 4.2% is what you need to stay even, anything less is a pay cut.
It means you already had the paycut, you need to have at least %4.2 rise + reimbursement to make even.
In high inflation countries you often get a revision every 2-3 months and you get a rise that is higher than the official inflation, as a result this solidifies the inflation and boosts the economy as everyone immediately buys whatever they can before it becomes more expensive. It's a vicious cycle.
Argentina, for example. Coworkers there told me about this. Madness.
Not necessarily, depends on the distribution of your own expenses. If you deviate from the average urban household (lets say, you have a particularly long commute or your car isn't as fuel efficient as the average. Look at the increase on fuel prices, 40.5%!).
If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
>> If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
This is the problem with people treat CPI as some word from the heavens...it is not. CPI is a highly constructed figure which conveniently includes/excludes things and is really more a floor of what the inflation is. Anyone living in the real world knows experienced inflation is way higher.
> CPI is a highly constructed figure which conveniently includes/excludes things and is really more a floor
It’s an attempt at a central tendency in a complex economy with non-linear variability.
> Anyone living in the real world knows experienced inflation is way higher
Here is a map of wage changes across the U.S., 2024 to 2025 [1]. Lots of variance! If you’re on the West Coast, right now, you’re seeing above-CPI inflation. If you’re in the Northern Rockies, where I am, you’re seeing less.
[1] https://www.bls.gov/charts/county-employment-and-wages/perce...
Don’t forget the obvious ‘finger on the scale’ influence from the administration too.
Why can't we just water down the gasoline? /s
That's what E15 is for.
Typically, you need a little more to make up for the difference in how much more taxes you pay at the marginal end vs the average for your total income...
The median earner with a standard deduction would need a ~4.7% raise to stay even...
"Inflation" is also increasingly distributed unevenly. The top 10% continues to make up a larger and larger portion of spending. It is entirely possible for ~4.2% inflation to be substantially higher (or lower) for the median household than the overall reported number.
Tax brackets are also inflation-adjusted, so shouldn't that cancel out?
Most of the relevant numbers in the American tax code are inflation adjusted, but not all of them. The biggest ones for people on this website are probably the value of the Child Tax Credit and the thresholds at which the Net Investment Income Tax/Additional Medicare Tax kick in.
No it pushes you into a higher tax bracket earlier so also acts as a tax increase
I think the point is the tax brackets are supposed to be inflation-adjusted. So all the brackets go up 4.2% too. Idk if the implementation details make this actually work out 1:1 but that’s the idea.
Much more since the numbers are cooked anyways. Car model N cost 10k, and car model N+1 costs 15k, if N+1 has 2 more airbags, one more gear, a keyless starter it will be counted way under 50% inflation, even though you pay 50% more.
Most of the average joe's money is spent on housing + food + energy these things are all way above the calculated """average""" inflation
They're not necessarily "cooked," (but they certainly can be). Inflation is genuinely hard to calculate since it's different for everyone, goods and services purchased drift over time, and as you mentioned, that exact good also changes over time. CPI (and others) are more useful in a MoM or YoY context. At 10 years, it's better viewed as best guess cost of typical living rather than an economic indicator comparing apples and oranges.
> housing
This is actually the hardest to get right because it's the largest, and 2/3 of Americans own homes, so part of their costs are fixed.
No it's cooked. For high tech items, they assume that improved technology means you are getting more for your money even if the price goes up, so they discount it. It's true that you get more for your money, but it ignores threshold effects, like you just can't buy an equivalent phone for $10 even if todays phone's are 200x better.
Then there's the "owner's equivalent rent" BS and this is 25% of CPI. It answers the question "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished, and without utilities?" It assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent.
Most employers in the US don’t realize this and act like cost of living adjustments are major rewards if they do them at all.
> 4.2% is what you need to stay even
On average, nationally. Look up your state or metropolitan-area CPI. Or better yet, track your actual expenses and project forward.
A conversation with your boss about a COLA raise really shouldn't include your own personal finances. "I just bought a house" is not a good reason for a raise; "prices in our area have increased" is a much better one
True, but how inflation affects each person is different. This isn't a good measure, but it is the best we have, and usually close enough to the truth.
I agree it’s not a perfect measure, but I conclude “it is the best we have, and usually close enough to the truth” makes it a good measure.
This is why it's important to get paid in stock. I get an automatic extra 100k a year if inflation runs hot!
What advantages does that have over taking your paycheck 100% in cash and investing in index funds?
In most cases, you are granted a notional dollar amount that is immediately turned into a concrete and fixed number of shares that then vest over the next 4 years.
Then, any share price appreciation on the shares is captured by you at vesting, rather than being paid in cash (the value of which has been inflated away) and then purchasing shares/index that has risen in the last 1-4 years.
If you are paid in cash, you will be buying fewer shares per dollar (and per year) rather than getting the same number.
Because I get way more money.
hope you dont work for salesforce
I've known a few people who lost everything when the company went bankrupt. (most died of old age when I was a kid - before pension reform companies often did put your retirement in the company stocks)
If inflation due to energy costs is running hot they’ll have to raise rates which will cause stock prices to fall.
Also, any asset that isn’t appreciating at least 4.2% is losing value.
Ah…inflation.
And you're still taxed on the "gain"
Many people here make more than they spend, and this is simply inaccurate when that's the case.
edit: I've explained how this works in a reply below.
How is it inaccurate? If I only care about buying apples, and apples get 10% more expensive, and my salary only increases by 5%, then I can't buy as many apples as I could have before. How many apples I do actually buy in the end is irrelevant to the calculation.
The person you're replying to erroneously interpreted "stay even" as "avoid going into debt," instead of your income's purchasing power remaining constant.
Consumer price index is about consumer goods. This is why tarrifs and such are considered regressive - they hit people harder the less money they have because a larger percentage of their spending is consumer goods.
If I invest half my income and spend half my income, and the prices of goods goes up 4.2% and my income goes up 4.2%, then I've made progress; I'm now investing more than half my income, because the half of my income I was spending has stayed even and the half I was investing has increased.
No, it's like, if you could buy 100 things before, but you can only buy 96 things now, then you have accumulated less value :D
I disagree. "Money" has many meanings, absolute and relative.
Receiving "market" compensation trumps real-world expenses, since the market for one's labor is a different market than the real-world expenses.
It's still a cut in purchasing power even if you aren't hurting.
But if you don't mind, I'll take 4.2% from your pay.
No. What isn't spent now is future spending. You are still getting less.
Here are some N-year rolling total inflation charts to put this datapoint in a longer-term perspective: https://totalrealreturns.com/inflation . Zooming out always smooths the noise.
> Prices are up +4.25% in the past year, and +24.49% in the past 5 years, according to the latest CPI data released Jun. 10, 2026. The price level has approximately doubled (2.01x) today compared to August 1999.
Not knowing if that's good/bad, as it is without any frame of reference, so the same data for Spain looks something like this:
Prices up +3.2% in the past year, up +22.4% in the past 5 years. Compared to 1999, a 1.88× difference, and if you want to compare since when it doubled, it'd be around September 1996. This is according to a tool from INE, Spain’s national statistics: https://www.ine.es/varipc/index.do?L=1
2% is good, anything over 3% is not good, anything over 4% is bad, 5% and higher is really bad. Hope that clears things up for you.
Can you really say that based only on the inflation? What if wages increased 6%, then 3% inflation wouldn't be as bad as if inflation raised 2% but wages only increased 0.1%? At least if you think about purchasing power I suppose. But won't claim to be an expert on this, happy to be educated by those who are :)
In general, higher inflation has a negative impact on consumer sentiment even if wage growth matches the inflation, which it rarely does.
But the bigger issue is that inflation is generally distributed much more evenly than wage increases. Very few employers offer a COLA that is automatic, so wages almost always trail inflationary pressure.
The FED says that 2% is good. 2% is not good. Their target of 2% per year means we have 2% compounding annually devaluation of our currency.
It's fine as long as t-bill rates match or exceed inflation. Then you can avoid losing purchasing power by just putting your money in the world's safest investment. Over the past century, t-bill returns have slightly exceeded inflation on average, though there have been periods when they didn't.
Stash paper cash in your safe and sure, you lose purchasing power. Use fiat money the way it's designed to be used, instead of using it like gold coins, and it works better.
Why is that not good? When inflation is close to 0 real interest rates increase which causes the economy to slow down. It seems clear to me that the optimal rate of inflation is always above 0.
The real problem imo is that below 0% is really bad, and has the potential to spiral. So the fed does not target anything close to 0%, but instead targets some buffer above it.
So it's not that "2% is good", but more that "2% is the best buffer we've decided above the <0% super scary threshold"
Why those arbitrary thresholds?
In complete seriousness:
An offhand remark made by New Zealand's Finance Minister, Roger Douglas, during a 1988 television interview.
Inflation isnt as simple as good/bad. Monetary theory shows us that short term inflation is a good way to counteract spikes in unemployment. Whether you prefer stable inflation with swings in unemployment or stable unemployment with swings in inflation or something in between is a political question.
Which puts central banks in a hard place right now because the problem is supply-side. The dual mandate is a lose-lose situation.
That shows that it’s been since 1991 since we saw similar five year increases in prices. Which is a long time. You also have to be careful not to zoom out so far you get into the “we all die anyway” scale where you’re not really tracking things that are meaningful to on-the-ground, as-lived reality
1918 isn't very relevant to modern living. And nobody wants to go back to the stagflation of the 1970s. And that scale is logarithmic.
Graph it without the logarithmic scale and draw a curve through the 1982-2018 data and the recent spike will explain why people are complaining about it.
Indeed. Back then food and shelter comprised a much larger % of the average income, and so each percentage point of inflation was considerably more painful than it is now.
Zooming out in what sense? Those rolling charts don’t mean much imo. Year over year change is a pretty good perspective and a tick up like this is not great.
Now overlay average income on top
Noise is a lot better when it's centered around 0.
Why is this logarithmic?
Because inflation compounds
Do understand actual policy decisions: https://www.richmondfed.org/publications/research/econ_focus...
I am not sure what the perspective is: we aren't the same economy (there are true financial system differences between now and say, 1985) and, even if we were the same, the three other shocks that rise like this are two world wars and an oil crisis. This is some dunderding old narcissist thinking he's the toughest kid on the block. You could argue the oil crisis was a similar result of the US never, ever learning a lesson about intervening in others' political systems (especially if there's oil involved), but trend line or not, no one had to go through this.
And the trend line would bend differently if we could just learn the lesson.
And yes I am oversimplifying: the current conditions are actually do to a number of stupid things the current administration did because they assumed everyone who came before them was stupid and woke, but this just strikes me wrong, as though the chart should be comfort to someone struggling to make rent or pay for medicine or what have you. Much of this could have been avoided.
The "stupid and woke" thing is just marketing, they know exactly what they're doing.
Simple, excellent data. Thanks.
This is so good Ty.
Basically, looking at inflation over time, we look pretty good here.
Up 4.2% (2.9% core, i.e. stripping out food and energy) over the last 12 months before seasonal adjustment.
The higher-frequency data are more concerning. CPI “increased 0.5 percent on a seasonally adjusted basis in May, after rising 0.6 percent in April” and 0.9 percent in March [1]. (0.3, 0.2, 0.3 percent for December, January, February, respectively.)
So a linear trend of 6% from March, closer to 9% if one extrapolates the March-April-May quarter. Almost all of that driven by food and energy. Core spiked to 0.4% MoM in April, but calmed down to 0.2% in May, on trend with pre-war numbers. It’s up 2.9% YoY, but trending a bit lower. (Looked at another way, we’ve already “booked” 2.5% of inflation for ‘26. If we continue at 0.5% MoM, we close the year +5.6%. Even if it drops to pre-war 0.2%, we’re still going to be +3.8%. Given the resumption of hostilities, I’m betting we’ll be closer to the former.)
Together with the jobs numbers, it would be weird for an independent Fed to not raise rates.
[1] https://www.bls.gov/news.release/cpi.nr0.htm
I find it interesting how many people act like inflation doesn’t exist especially with salaries.
If you made 100k in say 2000 the equivalent would be 200k today. If you go by median house price your salary should have doubled since 2015!
Prices have doubled since 1999!? Restaurant prices near me have doubled since 2015, easily. And that's not counting delivery going from free to 25% of the meal cost.
Except for a brief spike during Covid unemployment has been below 5% for a long time which has led to more wage growth for cooks and waiters than for programmers.
Not quite. The value of the currency has declined by 33% since 1999.
Prices are subject to the combination of the value of the currency and the value of the good. Food may be worth more than in the past, for example, so you cannot look at the value of the currency alone.
The value of the currency relative to an evolving bag of reference goods.
Value is always relative. Typically currency is what we use as the relative point of comparison, but obviously you cannot compare the value of the currency with the value of the currency. Hence why we flip things around. A bag of goods, as opposed to a single item, filters out the noise of each individual good changing in value independently.
Food is one of the things that's going to have the least change in value.
Quite the opposite. Value is essentially a function of scarcity relative to desire. Food desire may be, for all intents and purposes, stable, but availability is most certainly not. Something like a major weather event wiping out a crop can quickly change the scarcity profile. Food is especially prone to value variances over time.
Also, desire for restaurant service is driven by people with disposable income looking to treat themselves much more than baseline food prices. Restaurants serving this demand can optimise prices for their limited capacity, and have staff and real estate costs to consider
What specific definition of value are you using here? Sometimes terms with value get into the same realm as price, but the default definition of value is the benefit you're getting, and going to similar restaurants ten years apart is damn near the same benefit. Scarcity doesn't come into play.
Given that we're specifically talking about value in the context of currency and how that pertains to CPI, I am not sure where "benefit you're getting" would apply. CPI is definitely not interested in "the benefit you got".
However, if we are to change gears, the benefit you get out of a restaurant isn't constant either. Aside from maybe those trying to serve the elderly population, where there seems to be a viable niche of providing "remembrance of how things were in the good old days", restaurants that try to offer constant value quickly go out of business. They are forever needing to up their game to appeal to the typical clientele. Customers want increasingly more benefit as time marches forward to justify the visit.
An individual's perception of benefit is personal, so it is true that any given individual may not find increased benefit in restaurants trying to outdo each other by offering more and more benefits, but within populations it seems quite apparent that restaurants that "win" generally are offering more benefits (higher quality/more exotic/creative food, increasingly sophisticated ambiance, etc.) than they did in the past.
> Given that we're specifically talking about value in the context of currency and how that pertains to CPI, I am not sure where "benefit you're getting" would apply. CPI is definitely not interested in "the benefit you got".
...yes it is? It's seeing how many dollars you need for some specific goods.
> the benefit you get out of a restaurant isn't constant either
It's not exactly constant but it's pretty close. Especially over a single decade.
No...? Price is what we use to "see how many dollars you need for some specific good".
The P in CPI is price, to be sure, but that doesn't mean it is the same thing as price.
Not all components rise in cost at the same time. Overall, prices have roughly doubled since the early 2000's--things that I expect to cost, say, $10 would now cost around $20. However, some things have risen in cost much more quickly: housing prices, for one.
The things you are talking about are a phenomenon largely of the COVID era and later. The biggest wage gains post-COVID have been in the lowest end of the job market, and services where almost-minimum-wage labor is a high fraction of their cost have commensurately risen in price the fastest (e.g., fast food). Similarly, a lot of the easy money flowing into unprofitable grow-then-make-money businesses (like delivery firms) have stopped flowing in, so those services have had to actually make money from customers, which causes their costs to rise.
Yes restaurant prices have increased more but other things have increased less. For example entertainment, clothing, electronics, even automobiles.
It's CPI, they'll just keep changing the basket of goods until the numbers look like they want them to.
"Well, inflation since 2015 is nonexistent if you swap out steaks for 3 day old catfish and fruits for kool aid packets"
The worst part of this report is my diminished faith in the numbers.
In an age when one opponent says "the economy is great!" and the other "the economy is doing terrible!", I just tune out and keep my own thoughts.
Could you explain? What about this report pushes you toward not believing the numbers?
It's more the messenger than the message. Or in this case the people funding and staffing the messenger, and who desperately need this number to be as low as possible.
It’s not this report specifically but the other stuff the admin has done with the BLS.
It's unfortunately not limited to the current administration. We've had the government telling us to not trust our lying eyes about inflation at least since the Biden administration. At the time government officials were reassuring everyone that there wasn't inflation while everyone could see the prices going up everywhere.
Not so much THIS report, but you can't trust any data that the Trump administration puts out after all the blantant corruption. Remember the Sharpie on the hurricane chart?
All of the increase is from energy. Oil prices.
For your interpretation:
All items: +0.5% monthly; +4.2% year-over-year.
Energy: +3.9% monthly; +23.5% year-over-year.
Gasoline: +7.0% monthly; +40.5% year-over-year.
Fuel oil: +58.9% year-over-year.
Electricity: +0.6% monthly; +5.9% year-over-year.
Utility natural gas: -0.5% monthly; +3.0% year-over-year.
Food overall: +0.2% monthly; +3.1% year-over-year.
Food at home / groceries: +0.1% monthly.
Food away from home / restaurants: +0.3% monthly.
Nonalcoholic beverages: +0.6% monthly.
Cereals and bakery products: +0.4% monthly.
Fruits and vegetables: +0.2% monthly.
Dairy: -0.6% monthly.
Meats, poultry, fish, and eggs: -0.2% monthly.
Core CPI / all items less food and energy: +0.2% monthly; +2.9% year-over-year.
Shelter overall: +0.3% monthly.
Rent: +0.4% monthly.
Owners’ equivalent rent: +0.3% monthly.
Lodging away from home: +0.4% monthly.
Communication: +1.3% monthly.
Airline fares: +2.7% monthly.
Personal care: +1.0% monthly.
Recreation: +0.3% monthly.
Apparel: +0.3% monthly.
Used cars and trucks: +0.1% monthly.
Medical care: +0.3% monthly.
Hospital services: +0.7% monthly.
Motor vehicle insurance: -1.7% monthly.
Household furnishings and operations: -0.6% monthly.
New vehicles: -0.3% monthly.
Prescription drugs: -0.9% monthly.
At least raw milk is getting cheaper
Na, the hospital/medical care that comes along with it has gone up.
And eggs! Don't forget about the eggs!
Per the link, food is up 3.1% and everything else 2.9%. So energy pulled inflation up from about 3% to about 4%, but that's not "all of the increase"
>Per the link, food is up 3.1%
But if you look at the sibling comment, all of that came from "Food away from home ". In other words, it's all because of takeout/restaurants, not groceries. Those were actually dragging inflation down.
Energy going up drives evrything up, including food. Everything we do depends on energy in many different ways.
It's possible for energy to be behind the rises in other cost, but the data presented here gives no evidence for or against that possibility.
How much of the food cost (and everything else) is tied to the increase in diesel prices? Do they adjust that out?
Distributor fuel costs are a really small part of the food price, with the notable exception of things that are bulky and full of air like Cheerios. The overwhelming fuel component of grocery consumption, by a margin so large you can consider it to be 100%, is the consumer's fuel. Driving 5 miles to an American grocery store to buy a few pounds of food is the most absurd scheme ever hatched. Having your groceries delivered by a van on a route is much more efficient but, perversely, by internalizing the last mile fuel cost that would show up as higher prices for food in aggregate inflation statistics.
It's not just due to energy, at least not directly. Core CPI (ex-food and energy) has been increasing monotonically since February:
https://fred.stlouisfed.org/series/CPILFENS#
Some businesses use that as cover to increase prices even when their costs may not have actually been affected by the price of energy. Never waste an opportunity to put the big squeeze on.
Steadily rising prices will be the norm from now on. What will be interesting to see is how fast the corporate elite figure they can boil the frogs without them noticing too much.
$50.00 hotdog is coming.
Is this of any significance? I would imagine most people are like me: we shop based on quality and price and where we want something on that curve. Whether someone raises the price on me “because of inflation” or “because we want to make more money” is indistinguishable.
A rationale for the price rarely affects my choice. If I don’t want to buy something for a price, explaining that the guy won’t be able to survive without pricing it that high won’t get me to buy it. If I do want to buy something for a price, explaining that a guy is charging a hefty profit won’t get me to not buy it.
The only thing that will get me to buy it or not buy it is if it is at the point on the price/quality frontier where I want it.
> A rationale for the price rarely affects my choice.
This would make you the exception. Companies are constantly increasing prices to see how much they can charge consumers before they feel cheated and stop buying and/or enough customers get priced out to hurt profits.
Consumers tend to feel ripped off if they think a price increase was due to greed but are way more forgiving if they think the price increase was needed because of something outside of a company's control. That's why companies are quick to tell consumers that rising prices are due to things like fuel prices, bird flu, or supply chain problems.
Of course, that tactic isn't as effective as it used to be since consumers have seen companies using those excuses and feed them lines like "We're all in this together!" while those same companies report skyrocketing profits and they've watched as prices remained high or even increased even after the blamed fuel prices dropped and supply chain issues resolved.
A small number of companies control the meat supply in the United States. If you decide that you don't want to buy that $50 hot dog, you likely won't have many comparable options.
This cannot be emphasized enough. The rise in egg prices was such a thing. Avian flu was an impact, but not to the degree that egg prices increased. Those producers are reporting record profits.
Remember this is the number the Government is measuring and reporting. The "real" inflation that every day people feel in their wallet is significantly higher.
Why is the government measured inflation not the same as real inflation?
Because people can’t internalize regional variance. So since the beginning of time, it’s not noticed when the national number is higher and fraud when it’s lower.
Ah, you're right. A broad, contrarian dismissal is exactly the way you should respond in any conversation related to CPI/inflation.
By the way, that coffee is $9. Sorry, Brazil tariffs and everything else - you understand.
There are legitimate complaints with CPI. The Reddit variety is mostly statistical illiteracy.
> that coffee is $9
Lots of coffee data [1]. One I think tracks a cup in a city is up 17% YoY.
[1] https://data.bls.gov/timeseries/APU0000717311&series_id=CUUR...
Americans spend a significant portion of their income on food and fuel, which are excluded. Historically, these together accounted for about 15% of their income, probably up to 20% after recent price increases.
They are not excluded from CPI. You may be thinking of “core” inflation but the baseline CPI includes those.
Because they basically pick and choose what's in there.
If you sat down and did the math on what it costs someone to pay rent / mortgage, car insurance, health insurance, daycare, schooling, going out to eat and drink, doing anything for entertainment, go to the grocery store.. it's not a debate that the real inflation is significantly higher all the time than what is used to measure the number.
But that’s exactly what the inflation measures of the BLS is - someone doing the math on what all these things cost.
considering Iran War is likely to still be happening January 2029, imagine what costs will be like by then
every single day $5/gas is taking a BILLION dollars out of the economy that could have gone elsewhere
but it could be worse, we could be innocent civilian Iranians having the US bomb their water and power plants this week
Is this with the new method of counting what inflation means? (trimmed mean, without outliers)
No, the new method of inflation that Kevin Warsh likes is the trimmed mean which is 2.8%.
U.S. consumer wages index down -1% this past three months. also. We almost briefly started climbing positive in January, but nope, another 1% drop, sigh.
See also the +25% inflation / -1.2% net wages after inflation over five years chart here, for those unfamiliar with how inflation % press releases are misleading over time. If household spending power is -1% after +4% inflation, then that inflation probably isn’t healthy for your country’s economic future, etc.
https://www.statista.com/chart/32428/inflation-and-wage-grow...
(I also suspect the wage index itself is disguising about the total wages paid index dropping like a stone, but haven’t done the math to chart it yet myself yet.)
Take on debt, as much as possible. Otherwise, inflation will end all. Inflation eats debt.
Worse is coming and the markets seem to be in complete denial about it.
Oil has only really maintained the ~$100/barrel price because of record SPR releases worldwide. Also, that $100 price is kinda fake because it's a future price. The spot prices got much higher. Well, that runway is coming to an end. If the Strait of Hormuz re-opened today , we'd still be facing an energy shock. Plus there's famine coming.
Now the US won't run out of oil or refined petroleum products. The uS is now a net exporter. But it's a global marekt so the prices are going to go way up. And some countries and heavily dependent on oil for electricity. They are going to face blackouts.
So even though fertilizer shortages are skewed towards the Global South, food prices too are global so they're going up too.
In 1973, the energy shock took ~6 months to manifest [1].
But I think the real problem is dynamic pricing. Inflation is insidious. People start raising prices on the expectation of rising prices, thus causing prices to rise. But so many industries now are going well beyond that by essentially colluding through AI tools (eg RealPage) to further raise prices.
I honestly don't know how this ends without a deep, long recession.
[1]: https://paulkrugman.substack.com/p/oil-crises-past-and-possi...
> don't know how this ends without a deep, long recession
The same way Powell ended the last one without a deep, long recession.
The Iran conflict will continue on a low flame (occasional pinpricks like now) forever.
It serves the US Energy Dominance Agenda against China, Japan, India and the EU.
The Trump administration does not care about "its" population. There were already rumors early in the Trump term that Trump would not mind a recession so that his real estate cronies could buy cheap foreclosures.
So it is all a double win for the oligarchs. The stock market is still fine, nothing else matters.
That is ascribing far too much strategic thinking to this administration. They're just not capable of the kind of planning and foresight that would require.
The administration's planning is much more along the lines of, Will this look cool when they announce it on Fox News tomorrow? If you think there's much beyond that, you're ascribing strategic clarity where there isn't any. They're continue to flail around and TACO until they have a result they can present to MAGA loyalists as a success, regardless of actual merits.
It's not a question of ethics. It's a question of competence.
I mostly agree with you, but I do think they’re highly skilled at taking advantage of whatever messes they cause. “Chaos is a ladder” might as well be the theme of this decade.
It's not the administration doing the strategic thinking. The administration is entirely reactive and straightforward to manipulate -- if you have money.
The people with strategic goals just send money and compliments and the administration does what they want.
I would not underestimate the figures in the background. Trump and Hegseth are clowns of course, but they don't make policies.
The energy dominance model was already floated by Trump in his first term. He was the most vocal critic of Nordstream long before the Ukraine war. Biden couldn't push so aggressively because of the green agenda but dutifully shut down Nordstream and made the EU dependent on US LNG.
Now with the oil barons in power, there are no green agenda limitations and the long term plan (which is 100% not from Trump himself) can accelerate.
Look how they already make the EU and Japan rearm with all these levers (they should rearm, but for the purposes of keeping waterways free from whomever blocks them ...).
If this ends up being the case, 15 years from now we might look back at this as the catalyst for supercharging the energy transition across the world ex-US.
Might be wishful thinking, but I see this as the silver lining of the conflict
> I see this as the silver lining of the conflict
From what I can tell it’s also supercharging coal, particularly in Asia, e.g. India investing in coal gasification infrastructure [1].
[1] https://www.reuters.com/business/energy/india-clears-4-billi...
That doesn’t make sense. In the medium term this will strengthen efforts in China, Japan, India and the EU to move away from fossil fuel dependence much more quickly.
> It serves the US Energy Dominance Agenda against China, Japan, India and the EU
…how? What is this agenda? Juicing short-term energy exports? That’s not a “dominance agenda.”
The National Energy Dominance Council primarily cites national security interests:
https://www.eenews.net/articles/white-house-launches-energy-...
It works towards increasing US energy production at all costs even though the US is already a net exporter.
What is not mentioned of course is that increased US dependencies of countries like Japan are a feature:
https://energytracker.asia/japan-to-buy-record-amounts-of-ln...
That model, extort US investments and let Japan build US infrastructure in return for LNG was from 2025.
Now, with the Iran conflict, Qatar is shut off and Japan can be pressured even more.
> with the Iran conflict, Qatar is shut off and Japan can be pressured even more
I see your argument. It’s still short term. A fifth of Japanese electricity comes from renewables [1]. Meanwhile, Japan is diversifying its LNG suppliers [2].
[1] https://www.iea.org/countries/japan/renewables
[2] https://www.asahi.com/sp/ajw/articles/16464707
Absolutely hard Agree here. Thank you.
> It serves the US Energy Dominance Agenda
I can believe the US/UK oil companies believe that.
It may even be true, because the energy transition caps the entire future opportunity for oil/gas sales, and all the producers have been trying to capture a larger share of that pied for the last 2 years or so.
But this intervention is so heavy-handed that it is visibly destroying that future market. It looks like all oil companies will lose a lot because of it, US/UK ones included.
> The Trump administration does not care about "its" population.
Yes, he's trying to govern like an oligarch. We will see in November if this was a good choice or if the US is still too democratic for this to work. Or earlier if he tries to avoid that test.
Regressive consumer tax due to tariffs?
Regressive consumer tax due to going to war with a country for no real reason
Shipping container rates were starting to stabilize, but the issues with the Straight have caused a 80%+ increase in the last few months.
https://www.drewry.co.uk/supply-chain-advisors/supply-chain-...
> Shipping container rates
With respect to those numbers, I remember this recent accusation of price-fixing across 2019-2021 [0] that might have an effect, although I also have reservations about how much to trust anything coming out of the rotting US Department of PresidentsPersonalLawyers these days.
[0] https://www.justice.gov/opa/pr/four-worlds-largest-container...
'No real reason' is the 2026 version of 'they hate our freedom'.
And gas prices
That was months ago. These days it's more likely to be from the Iran war and the Strait of Hormuz being closed, and what that did to energy prices.
The Iran war is for sure a huge part of that (just look at the energy cost inflation!), but other elements are a factor too. "Months ago" is really not that long when it comes to inflation.
Thanks, Obama.