We need to stop talking about inflation and start talking about how WAGES ARE NOT GOING UP! Greedy corporations are not PAYING PEOPLE WHAT THEIR LABOR IS WORTH!
The problem is WAGE STAGNATION, not inflation.
Some inflation is a good thing. It keeps money moving, which is absolutely crucial to the system as it is. Wages do need to rise with or outpace it, though.
But I don’t like the system as it is.
The only way to save for retirement (within this system) is by exploiting other workers. I want overall consumption to decrease. I don’t like how every business is shortsightedly focused on “this quarter”. Inequality since the 1970s has skyrocketed.
This is a bad system.
Why?
Hear me out. If a $50k wages is $50k 10 years from now and all things stay the same why is that a problem? People at that wage can pay for a certain lifestyle at that wage forever.
Hear me out if all companies have a profit? Why have more profit next year? You can still grow you have profit.
Even loans still work as loans have profit built into them so what is the problem with stagnation
I agree that right now we’re facing both at the same time, but either one in isolation would still be a huge problem.
Inflation at the current (reported) rate of ~3-4% is healthy for almost any economy, since it promotes spending your money on high quality, long lasting goods, or investing your money to promote growth of businesses. A little depreciation of money each year dissuades people from sitting on their cash. Even without a stock market and capitalism, inflation is an incentive for people to put their long term savings into government savings bonds, which allows for more public development today without more taxes.
BUT if inflation is too high, (even with wages increasing at the same rate, which never happens) it’s extremely difficult for people to save cash to make large purchases. Any economy that uses money needs for people to be able to afford to wait a while with their money before deciding what to do with it, otherwise people are forced to settle for lower quality goods or whatever investment opportunities are available on short notice. Less time to make wise choices with money means less productive use of that money, meaning a less productive economy overall. Not what we want.
And of course, if wages don’t keep up with inflation, either because inflation is running away or because your government has refused to increase the minimum wage at all since 2009 when the national currency was worth 1.47 times as much as it is today, 15 years later (cough cough), then obviously you’re going to run into some problems with people’s ability to afford things.
That said, I think some shady manipulation to the consumer price index is going on to make the reported inflation figures look a lot lower than the actual increase in cost of living that the majority of people are facing. The biggest offender is housing costs skyrocketing in the past decade, but not uniformly across the US. The result is that areas where this hasn’t been nearly as big of an issue falsely “balance out” critical problem areas, where people are practically being forced to either relocate or become homeless due to how rapidly housing prices have gone up.
There’s just so many different things that need to go right for an economy to be prosperous for everyone who contributes to it, and right now the people in charge of steering that economy are getting kickbacks from the people who stand to benefit the most from taking it off the rails.
In the US, average hourly wages have increased more since 2019 than consumer prices. But as always, focusing on averages overlooks the impact on the lowest paid workers and anyone relying on social welfare payments. These are the areas where income often falls behind prices and it’s why many people still feel like things are getting worse despite the grandstanding from governments about how great their economic management is.
the median household income in America has increased $6,000 since 1990
If this was adjusted for inflation, this increase would be $115,000
https://nces.ed.gov/programs/digest/d22/tables/dt22_102.30.asp?current=yes
We saw a huge raise in wages during the 15minimum push. Still hear the same complaint about not being paid enough. Hell, billionaires get raises, so while I do think people should get more for the work they do (make a company money, earn more money), it definitely isn’t the only thing that has to change.
Scary this has to explained but this is a good eli5.
Yeah many people don’t realize that inflation is “price increase year over year” and think it means “current price.” Like lowering inflation will make their groceries cheaper
Price decreases are actually negative inflation and have all sorts of whacked out effects on an economy. It was a concern during COVID due to the huge drop in consumer spending forcing some prices to start to decrease.
Right, but the messaging doesn’t teach consumers that, it’s just “I’ll lower prices, vote for me!” But regardless, the fact that corporations are so driven towards quarter over quarter growth and immediately fail upon needing to lower prices demonstrates how broken the free market is
As I explained to my boss, you are paying me less if inflation has gone up, and I didn’t get a raise to at least match the rise. Bro started to explain to me how any child would run a lemonade stand with this piggy look in his chubby eyes. Business Budda needs a punch to the gut.
Hey, I was told that everything that goes up must come down. So where the hell is the deflation?
I know this is a joke but deflation can be scary too. Basically if it becomes a pattern then consumer spending will crater since people know if they wait their money will be with more in the future. Obviously this effect is less on stuff people have to buy to survive but it’s still not desired.
Yeah inflation means noone can afford stuff but there is almost maximum employment
Deflation results in a lot of stores shutting down since noone is buying anything anymore
High inflation can mean noone can afford more expensive stuff, too, and that those shut down - but generally it’s a better idea to have a small amount of inflation
Consumers are not going to wait months/years for the real value of their money to increase. They want their gender affirming pickup trucks now.
It hurts the government most because of the debt load it has accumulated, and that is why there is such a strong interest in assuring that deflation never occurs.
True about loans. Inflation benefits all debtors, not just the government. So poorer people who borrow benefit from inflation more than rich people who lend. As others have said, stagnant wages are the real problem.
Regarding deflation, people living in deflation actually do delay purchases. That’s why the deflation persists. There is a cycle that happens where delayed purchases reduce business sales, which causes layoffs. That causes people to delay more purchases.
In your truck example, someone would definitely delay that purchase if they lost their job.
So where the hell is the deflation?
Japan experienced a long term period of deflation during its “Lost Decade”. China’s currently in a deflationary spiral, which kicked off in 2023 and ran for most of the year.
China is a perfect example of an economy with deflation or dangerously low inflation. In 2023, China recorded a successive series of declines in its CPI, which began to fall in January 2023 and continued till July 2023, dropping from 104 points in January to 102.7 points in July. CPI improved for the next two months but dropped again in October and November 2023. In December 2023, it marked the longest streak of CPI declines in China since 2009. Similarly, the producer price index (PPI) has been in contraction for more than a year. According to Bloomberg Economics, the biggest contributor to the decline in CPI in China was falling food prices as the food prices plunged for six consecutive months from July 2023 to December 2023, dropping from -0.155 to -0.618. Among food, pork prices saw the biggest decline which plunged 26% in December 2023.
Another big economic issue in China is its property market crisis. On January 30, The New York Times reported that China’s home sales dropped by 6.5% and real estate development plunged by 9.6% in 2023, as per the Chinese investment bank, Dongxing Securities Corp Limited (SHA:601198). In December alone, property sales were down by 17.1% year-over-year. The chief economist at Natixis, Alicia Garcia Herrero said the property market has not touched bottom yet. Herrero emphasized, “There is still a long way to go.” The property market crash in China has impacted many firms and over 50 Chinese property firms have defaulted on debt, including the two market giants: The China Evergrande Group (OTC:EGRNQ) and Country Garden Holdings Co Limited (HKG:2007).
Thailand, Libya, Jordan, Bolivia, Azerbaijan, Saudi Arabia, Denmark, Italy… Export-oriented countries can periodically find themselves glutted with their own surplus when supply lines break down and foreign markets fail to absorb the excess.
Shouldn’t be a surprise that China, being a global export leader, is caught in the thick of it due to the emerging US/China trade war and the shut down of the Suez Canal.
It’s an issue with how inflation numbers are reported and I continue to believe that it’s done intentionally to confuse people (or reassure them).
It’s reported year on year but people don’t plan their finances year on year, they think back further than the last year so inflation should be reported both year on year and with a reference year.
It’s funny that other economy stats are actually reported in comparison to major events but not inflation. “The economy has improved X% since the 2008 financial crisis!” is the kind of things that’s getting reported, well, inflation should be reported the same way. How much has it increased since January 2020? That’s what people are feeling right now, not the 3% since August 2023.
It’s specially a problem in the US, and other selected third world countries, where they don’t have yearly minimum wage increases to offset inflation. I live in Brazil, and I get a raise that is always higher to the yearly inflation (thanks for my union), so yes, things are higher as ever, but my salary too.
I’m in the US, I’ve got a solid job, everyone I know says I’m lucky to get raises every year. My raises are still consistently slightly under inflation. Lots of the people I work with don’t understand why that means we’re not actually getting raises, and nobody wants to rock the boat and risk the small amount we do gain each year. It’s wild over here
Annual adjustment or annual + step increment?
Long term the annual adjustment will usually track inflation or be pretty close to it but until you’ve reached your last step you get two wage increases a year so it feels like you’re beating inflation…
Sorry, don’t understand the difference. In Brazil the raise is usually signed in March, but retroactive to the beginning of the year. Is negotiated on base of the past year inflation, so technically we’re always behind, because we get the rise at begging of year, but inflation is a constant process. There’s something I find bullshit and is that the raise is rated by the time you worked on the past year, so if you start working in July, you only get 50% of the negotiated raise. Not sure if it general or something stupid in my union contract.
Well then people might start asking questions like why X is up Y% but the ingredients for X have only gone up Z% in total
They think people are too dumb to understand that zero is not the target for inflation. They want to make the good news they’re reporting sound like good news.
You can disagree with their approach, but where they’re coming from makes sense. After all, the OP in the screenshot exists.
