Monday, June 06, 2005

Whipping Inflation Now?

Remember Gerald Ford's "Whip Inflation Now" campaign?

If you don't, no matter. It was a lame attempt by a lame-duck President to encourage Americans to defeat inflation during the highly inflationary 1970's.

Precisely how Americans were supposed to do this was not clear, and the plan failed, overwhelmed by Market Forces.

Speaking of Market Forces, my morning research is awash with inflationary reports, ranging from the rebound in crude oil prices and a surge in heating oil prices to the fact that the airline industry is running at its fullest capacity in years--crude oil prices notwithstanding--while cement shortages have "spread to most U.S. regions" (according to the Wall Street Journal)--crude oil prices notwithstanding.

And demand is so strong--crude oil prices, again, notwithstanding--that the average hotel room-rates are expected to be up 4.3% this year, to an all-time record $89.97.

Somebody remind me again why the 10 year is trading below 4%--crude oil, of course, notwithstanding?

Jeff Matthews
I Am Not Making This Up


hundredyearstorm said...

The biggest joke of all in the "inflation is well contained" argument is the growth rate of owner imputed rents in the CPI. In the April report - which showed a .5% increase in the headline CPI and no increase in the "core" number that Wall St. and the Gov't so love - the price of housing, making up approximately 30% of the index, rose .1%. Meanwhile, a few weeks later, the National Association of Realtors says home prices have risen something like 12% in the last year.

Anecdotally, I think it would be very difficult to miss signs of inflation all around you. My rent increased 5.5%, sandwich prices at my delis move from 5.99 to 6.49 (8%), tolls on bridges from 4 to 4.50 (12.5%), eggs from 1.49 to 1.69 (12.5%), home energy per kwh up 10%, etc... I'd be interested in hearing other's anecdotal tales. I live in the northeast and am curious if people in other parts of the country are seeing the same thing?

Fil said...

Speaking as a road-kill bear on housing for longer than I care to admit, and also as a believer that published inflation numbers are about as reliable as your local weatherman, the one sector where we have not seen inflation, at least in the greater Washington DC area, is residential housing. This of course is being attributed to the fact that people would rather be caught dead than passing on $500/sq.ft. abodes, and hence there are no renters left. Furthermore, most renters can pick and choose from the ever growing stock of unrented "investment" properties which will go up in price just because . . . that's what houses do.

Anecdotally, we manage two very high end homes and for 3-yr leases all we have gotten over the last 6 years have been 3% yearly increases, which have not even remotely covered the RE tax hikes resulting from a nearly 100% increase in the assessed value of the properties over the same period.

SiamTwin said...

i live in s. florida, and my pool man raised prices 9.2% last month to cover higher gas and chemical prices.

Kevin H. Stecyk said...

I think everyone forgets the hedonistic benefits that we now enjoy, which counteracts the inflationary effects to produce an overall lower inflationary number. For example, you are now searched and delayed before boarding a plane. You are no longer offered meals. And if you're female, your privacy is invaded by a body search. Surely benefits like that must be worth something, no?