Inflation, Travel Costs, and MFs

[arcsinx]

If any of you have been paying attention to the economy lately, it looks like inflation is heading up. It was up to 4.2% in April with expectations of inflation at/above/near 5% in May (report comes out this Thursday).

Some key price increases in April's CPI numbers:

Gasoline	+49.6%
Utility gas service	+12.1%
Used Cars & Trucks	+21.0%
Laundry Equipment	+23.6%
Mens Pants & Shorts	+10.4%
Transportation Commodities (Less Fuel)	+9.2%
Lodging (including motels & hotels)	+8.1%
Car & Truck Rental	+82.2%
Airline Fares	+9.6%
Other Intercity Transportation	+8.8%

Of course, some of this is likely due to the fact that a year ago, we were locked down. So it makes sense there'd be a surge. But, most economists believe inflation is coming sooner rather than later.

Do you all think this will have a drastic effect on MFs and/or travel costs in general? It's ALREADY having a huge effect in some sectors, such as rental cars. If these trends continue, we could have to be shelling out much more to make these trips happen.

Or am I off-base? Let me know what you think!

 

[bogey21]

My Son owns a small restaurant. He told me the other day that his wholesale price for chicken wings has doubled and he had to raise the price to his customers...

George

 

[dioxide45]

I expect to see big increases in our MFs next year. Labor costs are also going to be way up with places unable to attract workers, they are going to have to pay more.

Given the numbers you are reporting, I don't see how economists think that inflation is coming sooner rather than later, it is here already. I am seeing it pretty much everywhere.

 

[geist1223]

Don't forget the huge price increases caused by the shortage in building supplies. The Fed is tip toeing the line to not over heat the economy. But I think they are behind the power curve.

 

[Superchief]

When US oil production was cut by 27% and the pipeline was shut down, it was inevitable that gas prices would increase substantially. This also impacts other costs. I've also noticed huge increases in beef and chicken prices due to food processors being under staffed.

 

[GetawaysRus]

The Fed tells us that inflation is not a problem. So, one of the following must be true:
1. Powell visited the Star Wars universe and ran into Obi-Wan Kenobe, who told him “Nothing to see here ... move along... move along.”
2. Powell eats a lot of Costco rotisserie chicken. (That's probably the only thing I buy that hasn't increased in price.)

 

[dioxide45]

2. Powell eats a lot of Costco rotisserie chicken. (That's probably the only thing I buy that hasn't increased in price.)

Or he is chowing down on the food court hot dogs. On another note, I noticed today at our local Costco that it looks like they are planning to put back in the food court seating. They had the tables in there on skids wrapped in cling wrap.

 

[arcsinx]

When US oil production was cut by 27% and the pipeline was shut down, it was inevitable that gas prices would increase substantially. This also impacts other costs. I've also noticed huge increases in beef and chicken prices due to food processors being under staffed.

April's CPI was actually calculated BEFORE the pipeline hack, so the hack will factor into May's CPI coming out this Thursday.

 

[davidvel]

Or he is chowing down on the food court hot dogs. On another note, I noticed today at our local Costco that it looks like they are planning to put back in the food court seating. They had the tables in there on skids wrapped in cling wrap.

They were eating in our food court last week (San Diego County.)

 

[Superchief]

April's CPI was actually calculated BEFORE the pipeline hack, so the hack will factor into May's CPI coming out this Thursday.

I wasn't talking about the Columbia pipeline, I was referring to the oil pipeline from Canada that Biden shut down with an executive order shortly after inauguration, even though it was mostly completed. Gas prices had been under $2 per gallon prior to Covid when the economy was strongest in years. The US was no longer dependent on foreign oil.

 

[arcsinx]

I wasn't talking about the Columbia pipeline, I was referring to the oil pipeline from Canada that Biden shut down with an executive order shortly after inauguration, even though it was mostly completed.

Gotcha. Yeah, I'm sure that had some effect. The hack attack will make it worse this month, I'm sure.

 

[Superchief]

Gotcha. Yeah, I'm sure that had some effect. The hack attack will make it worse this month, I'm sure.

I agree. Although I'm not a big Trump fan, I think a lot of his policies greatly helped the US economy while keeping inflation in check. The trillions of dollars in spending will do more harm than good to most Americans in the long run, but nobody votes against Santa Claus.

 

[MrockStar]

Until Santa has to pay the Christmas bill and the elves' revolt.

 

[arcsinx]

I agree. Although I'm not a big Trump fan, I think a lot of his policies greatly helped the US economy while keeping inflation in check. The trillions of dollars in spending will do more harm than good to most Americans in the long run, but nobody votes against Santa Claus.

Agreed. I'm not too much a fan of either party if I'm honest. (There's a great South Park episode about this!) I think it'd be interesting to have many viable parties like some countries do, but I digress.

I'll post the new CPI figures and highlights of the big rises Thursday here in this thread (I'll be at work when they come out in the AM, so I won't be upset if someone beats me to it haha). But I'd personally wager than inflation is already north of 5% and could be marching towards 10%. Just last week, the IRS announced they were giving new stimulus checks out to people who filed for unemployment during the pandemic. Also in the next month or so, the $300/month child tax credit checks will start rolling out. And with the supply/demand imbalances, worker shortages, and wage increases, it's a perfect storm for high inflation.

I think a 10% increase in MF at most resorts probably wouldn't be that out-of-bounds, considering what I think is it come. It may even turn out to be too low. And that's not even getting started on rental cars, plane tickets, etc.

 

[MrockStar]

Thank you arcsnix, great thread.

 

[MOXJO7282]

Boy this thread has a lot of political overtones that I'll try to avoid but my logic says its a case of supply and demand and it should level out. At least that is what most experts say but many follow their politician before the experts nowadays.

Take rental cars. My research tells me when the pandemic hit after awhile car rental companies sold off the inventory so they weren't sitting with a zillion cars not renting. Makes perfect sense to me. Prices sky rocketed but have since started to come down. How fast they come down is the question. but I'm one that thinks the worst is over and this very well could be the driving force to finally drive salaries up significantly compared to very small or non-existent salary increase people other than CEOs have historically seen.

I guess time will tell. Unfortunately I also see big increases in MFs this year because TSs never miss an excuse and this is a good one.

 

[Superchief]

This reminds me of the Carter years when my mortgage rate was 13.5% adjustable with a 3% cap. Unfortunately, now I'm retired and the Social Security adjustment doesn't include most of the main expenses that retirees have to deal with. I'm also concerned that stock market will crash if there is an increase in capital gains tax for the 'wealthy'.

I really hope that resorts start controlling some of their discretionary expenses, including activities and adding amenities that don't really benefit most owners but raise their resort rating scores from those who don't have to pay the expenses. I'm all for charging activity fees that cover their costs.

 

[MrockStar]

My first mortgage 10.25 fixed and we thought that wasn't to bad compared to those during the late 70's like Superchief said.

 

[arcsinx]

Boy this thread has a lot of political overtones that I'll try to avoid but my logic says its a case of supply and demand and it should level out. At least that is what most experts say but many follow their politician before the experts nowadays.

Take rental cars. My research tells me when the pandemic hit after awhile car rental companies sold off the inventory so they weren't sitting with a zillion cars not renting. Makes perfect sense to me. Prices sky rocketed but have since started to come down. How fast they come down is the question. but I'm one that thinks the worst is over and this very well could be the driving force to finally drive salaries up significantly compared to very small or non-existent salary increase people other than CEOs have historically seen.

I guess time will tell. Unfortunately I also see big increases in MFs this year because TSs never miss an excuse and this is a good one.

I certainly haven't intended any political overtones (or undertones) with this thread. While I, of course, have political views, I'm very much non-partisan and don't particularly blame any one party for where we are now.

As far as the argument that it's just supply and demand hiccups, that's a very economically-progressive argument. The M1 money supply (which is essentially the easily-accessible money in the U.S., think bank accounts, savings accounts, etc.) is currently out of control. It has been on an upward trend since the Great Recession, but has exploded during the pandemic. M1 Money Supply (St. Louis Fed) Also, the Money in Circulation shows that about 20% of entire currency in current circulation was created since the start of the pandemic. Currency in Circulation (St. Louis Fed). With so much money flowing through the economy, combined with the supply/demand issues, I honestly do think up is the only way to go.

 

[Superchief]

I worked in Marketing for major corporations for most of my career. Consumers really need to beware in times like this because most companies focus on 'enhancing' their margins. A favorite tactic is downsizing packaging and decreasing the manufacturing or ingredient costs. Pay close attention to package sizes and unit pricing in order to get the most for your money.

 

[GetawaysRus]

There are those who don't agree with the Fed:

Deutsche Bank warns of global 'time bomb' coming due to rising inflation

Inflation may look like it will go away but is more likely to persist and lead to a crisis in the years ahead, according to Deutsche Bank.

www.cnbc.com

 

[rickandcindy23]

I agree. Although I'm not a big Trump fan, I think a lot of his policies greatly helped the US economy while keeping inflation in check. The trillions of dollars in spending will do more harm than good to most Americans in the long run, but nobody votes against Santa Claus.

I agree with that.

 

[rickandcindy23]

My first mortgage 10.25 fixed and we thought that wasn't to bad compared to those during the late 70's like Superchief said.

Our mortgage on this house in 1979 was 10.5% FHA, we refinanced several years later for 8.5% and thought we were seeing an amazing interest rate. Now our daughter and her husband refinanced their house with VA for 1.99% for 20 years. She is ecstatic. I would be too!

It's their forever house, so they won't cringe too much when the house goes down in value by $250,000, when the economy tanks, which I believe is within a couple of years.

People walk away from mortgages, even with record low interest rates, when they realize the value of their house is less than what they owe. It's really kind of crazy. Interest rates will rise and property values will decline. It's happened before and will happen again.

 

[rickandcindy23]

I wasn't talking about the Columbia pipeline, I was referring to the oil pipeline from Canada that Biden shut down with an executive order shortly after inauguration, even though it was mostly completed. Gas prices had been under $2 per gallon prior to Covid when the economy was strongest in years. The US was no longer dependent on foreign oil.

Yeah.

 

[Brett]

I certainly haven't intended any political overtones (or undertones) with this thread. While I, of course, have political views, I'm very much non-partisan and don't particularly blame any one party for where we are now.

As far as the argument that it's just supply and demand hiccups, that's a very economically-progressive argument. The M1 money supply (which is essentially the easily-accessible money in the U.S., think bank accounts, savings accounts, etc.) is currently out of control. It has been on an upward trend since the Great Recession, but has exploded during the pandemic. M1 Money Supply (St. Louis Fed) Also, the Money in Circulation shows that about 20% of entire currency in current circulation was created since the start of the pandemic. Currency in Circulation (St. Louis Fed). With so much money flowing through the economy, combined with the supply/demand issues, I honestly do think up is the only way to go.

yes, presidents don't (necessarily) impact interest rates
There are many factors that influence interest rates

.