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There’s no way I know of to tell what inflation will be in future years. I hope the low-ball theories are correct. Just for the hell of it I ran a calculation using annual compounding and the latest government reported 7.5% YOY inflation rate. That resulted in a doubling of prices in just over 9.5 years. Admittedly, we’re talking about averages here and a basket of different goods and services. Not everything inflates in price at the same rate. Cars are just one component, but a large portion of most household budgets.
Taking Kelly Blue Book’s end of 2021 average new and used car prices ($47,000 and $28,000 respectively) that would put average car prices 9 years from now at about $94,000 new and over $50,000 for a used one.
Point? None really. But I think we all tend to underestimate the impact of inflation as it compounds on top of the prior year’s increase year after year.
Also, as prices increase, the product / service (size, quality, features,etc.) often stealthily devolve.
Here's a few:
- Food Products - Ice cream, OJ, Milk and most other groceries - have devolved in size while rising in price
- Manufactured Goods - lower quality components have shorter and shorter life cycles causing consumer to consumer durable goods more frequently.
- Technology Innovation - Requires frequent upgrades of both software and hardware making older technology obsolete.
- Airline Ticketing - The illusion of price - layering costs based on required options such as a seat assignment, a carry-on / checked bag, a person to person encounter - the list of costs is long.
Comments
Taking Kelly Blue Book’s end of 2021 average new and used car prices ($47,000 and $28,000 respectively) that would put average car prices 9 years from now at about $94,000 new and over $50,000 for a used one.
Point? None really. But I think we all tend to underestimate the impact of inflation as it compounds on top of the prior year’s increase year after year.
Also, as prices increase, the product / service (size, quality, features,etc.) often stealthily devolve.
Here's a few:
- Food Products - Ice cream, OJ, Milk and most other groceries - have devolved in size while rising in price
- Manufactured Goods - lower quality components have shorter and shorter life cycles causing consumer to consumer durable goods more frequently.
- Technology Innovation - Requires frequent upgrades of both software and hardware making older technology obsolete.
- Airline Ticketing - The illusion of price - layering costs based on required options such as a seat assignment, a carry-on / checked bag, a person to person encounter - the list of costs is long.
https://messaging-custom-newsletters.nytimes.com/template/oakv2?campaign_id=116&emc=edit_pk_20220218&instance_id=53626&nl=paul-krugman&productCode=PK&regi_id=22268089&segment_id=83212&te=1&uri=nyt://newsletter/6ea057b2-dbc2-5aed-aaa2-666856b0fe39
and related optimism
https://www.nytimes.com/2022/02/17/opinion/biden-economy-inflation-growth.html
And yes, the Democrats will pay the overinflated political price for this sort of corporate gouging in the mid-terms if they don't speak up about it. Two basic points could reinvigorate the party: 1. Inflation comes from many sources, including gouging, and 2. taxes pay for stuff you actually need--military, roads, bridges, schools, healthcare, social security. The former point they might make. The latter they never will.
https://www.nytimes.com/2022/02/22/opinion/democrats-republican-objectivity.html
https://messaging-custom-newsletters.nytimes.com/template/oakv2?campaign_id=116&emc=edit_pk_20220225&instance_id=54275&nl=paul-krugman&productCode=PK&regi_id=22268089&segment_id=83957&te=1&uri=nyt://newsletter/3237e587-1339-5972-997e-c699ff9fd430&