October Inflation Recap

With PCE inflation figures in, we have the key price indices for October.  Core PCE inflation was at market expectations (Bloomberg). Nowcasts for November inflation is down markedly.

Figure 1: Month-on-month annualized CPI inflation (blue), PCE price inflation (red). Light squares are Cleveland Fed nowcasts as of 11/24. Source: BLS, BEA via FRED, Cleveland Fed, and NBER.

Core inflation looks like it will be down as well.

Figure 2: Month-on-month annualized Core CPI inflation (blue), Core PCE price inflation (red). Light squares are Cleveland Fed nowcasts as of 11/24. Source: BLS, BEA via FRED, Cleveland Fed, and NBER.

Note these are month-on-month inflation rates; year-on-year rates will continue to rise through November’s numbers even if these nowcasts prove correct.

103 thoughts on “October Inflation Recap

  1. Barkley Rosser

    Menzie,

    Even with the likely further lowering of the month to month due to the ending of gasoline price increases (and their apparent so far slight decline) the year to year will still be higher in November than October?

    Reply
      1. Barkley Rosser

        Moses,

        My question noted that in that last sentence he said the y o y number for November was going up. I was asking to verify if he thought that would hold even if GASOLINE prices fell this month, which they seem to have done a bit of, with not much reporting of that. But perhaps you think it would have been a more reasonable question on my part if I had said “gas prices.”

        It does strike me that, while the month is now nearly over, if we were to see a sufficiently large decline in those prices, it might bring the m o m inflation rate down enough to make the y o y one also go down. But, apparently you think this is not possible. Fine, Moses. Do you want to have a house drop on your head?

        Reply
      2. Barkley Rosser

        Moses,

        BTW, the house comment is strictly a joke. No, I do not wish to have that happen. Just mocking the recent meme coming from a particular source. So, no, I do not think you are wicked witch.

        Also, I assumed that since Menzie did not reply to my question, that meant that indeed he expects the y o y inflation rate still to go up for November, no matter what the outcome on gasoline prices is. Did not need your little note on this for that, thank you.

        Reply
          1. Moses Herzog

            Lauren Boebert, Kyrsten Sinema, and Matt Gaetz aren’t really “people” Menzie. But I’m scanning sci-fi books to see if I can find a category for them.

          2. Barkley Rosser

            Oh, Menzie, Moses is clearly inspired that somebody else has taken up his long campaign to declare me the s word that you once declared inappropriate to use. Understandable that he cannot help himself now that somebody out there is agreeing with him.

            Hey, Mose, you too can show up on March 23 to cheer on You Know Who when he tells my colleagues and a Nobel Prize winner how they should just pay no attention to anything I say because…well, I suspect he will not show up, so this is your big chance. You can do it, and you can add the especially convincing point that I resemble the Speaker of the House, who, heck, Everybody Knows is just completely beyond the pale on that s word. You can even offer everybody some cheap ice cream so they can prove that they are Genuine Taxpayers of Virginia for whose interests you have been speaking up here for such a long time, and, just to really establish your credibility, you can throw in a lecture on how European American genes are not distributed in a skewed fashion. This will be a much superior substitute for whatever Nobel Prize winner Vernon Smith might have said to them, and the assembled audience will be eternally grateful to you. Vernon himself I am sure will also be super grateful to learn this astounding piece of information that only a young person like yourself might come to understand on his own as you have.

          3. Barkley Rosser

            BTW, Moses, it really is too late to show up in the retail GASOLINE prices (see, I am remembering your so-very-important point on this that you in fact accidentally thought I had gotten wrong on another thread by saying “gas,” although I did not while all kinds of people here have said that without Wise You correcting them) for this now nearly done month. But indeed crude oil prices have also taken a sharp dive of over 10 percent in response to the news of the omicron Covid variant. So, even if the y o y November inflation rate is higher than the October one, the December one looks more likely to be really noticeably lower.

            But, of course, you already fully understand that, after I was the first person here to point out the cessation of crude oil prices and the GASOLINE prices rising, that latter point you yourself having verified as happening where you live, although you did not bother to applaud me for being the first here to note this devrelopment, rather, instead, to express your pride in having started the small small bandwagon joined by You Know Who regarding the influence of my exceedingly great age on my ability to know much of anytying accurately. Right, boy?

  2. ltr

    Sadly, so far as I can tell, coronavirus infections have been increasing through Europe and are increasing again in the United States.  Massachusetts, for instance, seems a problem state again.  The increases in symptomatic infections might well slow growth at least sector by sector in Europe and the US.

    Reply
    1. ltr

      There is unfortunately reason to be concerned about increasing coronavirus cases recorded through Europe and in the United States. Already European governments are restricting selected economic activity, but for a time individual concern is likely to limit economic activity as well.

      Reply
    2. ltr

      http://www.news.cn/english/2021-11/27/c_1310335599.htm

      November 27, 2021

      WTI crude futures sink over 13 pct on demand concerns

      NEW YORK — U.S. oil prices plunged more than 13 percent on Friday due to concerns over the discovery of a new variant of COVID-19 in South Africa.

      The West Texas Intermediate (WTI) for January delivery sank 10.24 U.S. dollars to settle at 68.15 dollars a barrel on the New York Mercantile Exchange.

      Meanwhile, Brent crude for January delivery lost 9.53 dollars, or 11.59 percent, to settle at 72.72 dollars.

      The two benchmark crude oil futures marked the deepest single-day drop since April 2020….

      Reply
  3. rsm

    Why not provide historical accuracy of nowcast predictions? Because it’s noise?

    If i lock in 7.2% return on a Treasury I-series bond, will I make bank? Why not provide a proof-of-concept portfolio and trade it on your predictions? Can we see the historical Profit & Loss on trading on Nowcast predictions?

    Reply
    1. pgl

      It is trolling like this that got you disinvited from Thanksgiving dinner. No turkey for you. Put a confidence interval around that.

      Reply
    2. Barkley Rosser

      rsm,

      I suggest you do it. Then you can brag about your glorious prediction triumphs as well as your own standard errors rather than hassling everybody here repeatedly about this stupid dreck of an obsession of yours.

      Reply
    3. Baffling

      Since you seem to know better, how about we see you and your brothers profit and loss statements from your investment. I bet it would be illuminating.

      Reply
    4. caveat emptor

      There is no lock in for i-bonds. The *transitory* adjustment expires in 6 months and is renewed at the rate of a volatile economic statistic (which could be as low as 0). The underlying bond itself currently functions as a 0% interest 1 year unbreakable CD (that is penalty free after 5 years).

      Reply
  4. Paul Mathis

    During an expansion, the “rise of prices is merely a by-product of the increased output, which will occur equally if there is no increased saving but, instead, an increased propensity to consume. No one has a legitimate vested interest in being able to buy at prices which are only low because output is low.
    The General Theory of Employment, Interest, and Money, p. 328.

    Inflation is a natural result of any economic expansion where demand is increasing rapidly from a recessionary low. Not only did Keynes understand this, but he denounced those who complained about higher prices that resulted from more people gaining jobs and higher incomes. The complainers have no “legitimate vested interest to buy at prices which are only low” because of these circumstances. But as we have seen, Americans can be incredibly selfish.

    Reply
    1. Moses Herzog

      Did you mean most Americans, or just the ones (and their lobbyists literally creating and writing the tax code in the halls of congress) benefitting from a regressive tax system?? Asking for a friend.

      Reply
    2. Macroduck

      In fact, we are in the middle of the fastest recovery in decades or maybe since records have been kept. Policy success.

      Reply
      1. Moses Herzog

        If this gets out of South Africa, my suspicion is it could put a re-emphasis on wearing masks, vs getting a vaccine, when a vaccine for this particular variant isn’t there yet.
        https://www.theguardian.com/world/2021/nov/25/what-do-we-know-about-the-new-worst-ever-covid-variant
        I’m going to be very curious to see how this effects those under age 50, because if it does effect those under age 50 we may finally see how hypocritical these folks like CoRev and Joe Rogan are on this. They are calling it “fake” etc. But when the scientists tell the Seth Rogans and CoRevs it’s effecting their own age group in a major way, watch how drastically they change their tune on Covid-19, and on wearing masks in a large public setting.

        Reply
        1. Macroduck

          Two cases in Hong Kong. Cases in Malawi. Some evidence the new (Nu) variant is quite widespread in South Africa, suggesting high transmissability.

          R_t estimated at 2.2. R_t for the Spamish Flu estimated at 1.8. So “uh, oh”.

          Reply
          1. Moses Herzog

            @ Macroduck
            I saw some suggestions that this may not be so much to be excited about. That the reason this was identified in South Africa first was because they are much better on tracking and testing etc, and that it could already be in many nations, not really “having started” in South Africa, but South Africa only found it first because they are one of the better nations on testing/tracking. Even going so far as to say the travel shutdown MAY have been unfair or overkill, or a kind of “unfair punishment” for being better on keeping track of variants/mutations better than other nations. I tend to lean towards sticking to my original thoughts on this as stated in my original comment you were kind enough to respond to.

            ThIs is pretty good, you can either watch the video or read the transcript, they are the same content. I prefer the video, but it’s really the same. Just click the white play button in the upper left. Scroll down if you would prefer to read the transcript.
            https://www.pbs.org/newshour/show/alarm-grows-after-emergence-of-new-omicron-covid-19-variant-heres-what-you-need-to-know

          2. Barkley Rosser

            Yes, Moses, you need to highlight by emboldening words here because readers here are so mentally incapacitated thy need that to understand any of the brilliant things you write here. You are such a wise teacher, none of us can get through a day without having you make clear by your careful emboldening of words what it is Really Important To Know in your absolutely essential posts here.

          3. Moses Herzog

            @ Barkley Junior
            It’s a good feeling to have fans. If I start an Uncle Moses fan club, I’ll make you Treasurer of the Charlottesville Virginia “Meth Heads Over Yonder” Chapter.

          4. Barkley Rosser

            Moses,

            BTW, the evcidence really is that most masks do not do much, although they are more helpful for those over 60, but basically not helpful at all for those under about 50. The high quality surgical masks are more effective, and, really, people should seriously switch to using those. The regular ones are really mostly good for show.

            What do seem to be effective are vacccines, although indeed even vaxxed people can still get Covid. But the evidence is clearly in that only those with major co-mobidities end up getting hospitalized or dying, e.g. the late Colin Powell. Of course we still do not know their efffectiveness against the Omicron variant, but hopefully they will still work pretty well, and the pharm cos will get improved variants of the existing vaccines out that will work better.

            So, switch to surgical masks and get vaxxed, you all.

  5. GREGORY BOTT

    The first quarter of 2022 will feature a large yry decline in consumer spending. This will likely be when supply starts catching up putting downward pressure on prices.

    Reply
    1. Barkley Rosser

      Of course, Gregory. Nobody will want buy anything when the prices are so low.

      Reminds me of a joke about the rich Ne Russians back in the 90s. “Look at the Versaci tie I am wearing! I only paid $1000 for it! Yeah? Well I know where you can pay $2000 for one of those!”

      Reply
  6. ltr

    https://fred.stlouisfed.org/graph/?g=n9Po

    January 15, 2018

    Price index for personal consumption expenditures less food and energy, 2007-2021

    (Percent change)

    https://fred.stlouisfed.org/graph/?g=DaZv

    January 15, 2018

    Consumer Price Index and Personal Consumption Expenditures Price Index less food & energy, 2007-2021

    (Percent change)

    https://fred.stlouisfed.org/graph/?g=FKhV

    January 15, 2018

    (Consumer Price Index and Personal Consumption Expenditures Price Index) less food & energy, 2007-2021

    (Percent change)

    Reply
  7. pgl

    Sunday I cheer for NFL defenses to take out certain quarterbacks with Aaron Rodgers being near the top of my list. The NFL Commissioners needs to ban Rodgers from this Pat McAfee show for garbage like this:

    https://news.yahoo.com/aaron-rodgers-says-hes-suffering-183341213.html

    First he makes a really sick joke about “COVID toe” and then when the WSJ is stupid enough to repeat this lie, Rodgers gets on his band wagon for the WSJ spreading “disinformation”. Seriously?

    I’m hoping the Raiders defensive linemen step on that damn toe repeatedly. Go Raiders!

    Reply
  8. JohnH

    “In a time of high inflation, you hear a lot about companies “passing costs” on to customers. In order for companies to maintain their God-given right to earn a profit, they must raise prices to offset the cost of producing goods and getting them into peoples’ hands. And thanks mostly to the hidden risk, exposed by the pandemic, of neoliberal gospels like just-in-time logistics, deregulation, and offshoring, prices really are going up.

    But there’s something else mixed in with this latest bout of inflation. Companies aren’t just passing costs onto us. With corporations using inflation as a cover for raising their prices, you and I are passing profits onto companies.

    “Executives are seizing a once in a generation opportunity to raise prices,” reads a Wall Street Journal story explaining that around two-thirds of the largest publicly traded companies are showing profit margins higher today than they did in 2019, before the pandemic. Over 100 companies show profit margins of 50 percent or more above those 2019 levels.”
    https://prospect.org/economy/fighting-the-inflation-profiteers-biden-kennedy/

    With oligopolies ubiquitous in the US economy, there is little to stop them from raising prices. As long as consumers expect inflation, why not oblige? And when corporate price increase lead to more inflation, they have an excuse to raise prices even more…until it becomes a self-perpetuating phenomenon replete with higher margins and higher stock prices. And with a lack of real competition, what’s to stop them?

    Methinks that this genie is out. And it will be hard to put back in the bottle.

    Kudos to the Wall Street Journal for a phenomenon that seems to have escaped the attention of most everyone else, including most economists.

    Reply
    1. pgl

      Maybe in usual haste to attack economists as stupid and uncaring you forgot to finish this discussion which included this:

      ‘A Biden speech in the manner of JFK, by itself, will do little. But reviving the force of the U.S. government to promote competition and police illegal behavior might help. In addition to the gas industry investigation at the FTC, on Tuesday the Justice Department sued to block a merger between two of the nation’s largest sugar producers, which would likely hike prices for this ubiquitous food component. The administration has also been active in addressing concentration in the meat processing industry, which during the pandemic has seen increased prices at the grocery store even as farmers get exceedingly low prices for cattle and chickens.’

      JFK consulted with his Council of Economic Advisors back the day and Biden is working with his CEA. So to claim economists have not noticed the role of market power is just another one of your incredibly stupid lies. But please do not let me interrupt your pointless little parade.

      Reply
      1. JohnH

        A little action after decades of bipartisan inaction is certainly welcome. Unfortunately, it’s too soon to tell if Biden is really serious or whether it’s just more window dressing to lure gullible voters like pgl.

        Reply
    2. pgl

      “Over 100 companies show profit margins of 50 percent or more above those 2019 levels.”

      Now that is a headline grabber by your author here. He decided to note P&G but I suspect his research skills failed him here. Not that P&G is not incredibly profitable as its operating margin averaged a staggering 22% over the last three years. Its profit margin varies a bit by year being 20% in 2019 and 23% in the most recent reporting. But that is not a 50% increase for his prime example.

      P&G has always used its market power to exploit high margins. Unilever – its only real competitor does too. And these two multinationals are even ripping off consumers in places like Africa.

      Of course this is old news for anyone paying attention. But of course JohnH would have us believe that people like me neither know about this nor care about this. It is indeed his parade to make such insulting and stupid claims buttressed by writings from people who are far behind the rest of us.

      Reply
      1. JohnH

        Of course, soaring profits are obvious to anyone who chooses to follow them. They now represent over 13% of GDP. A 5% price increase would rival the impact of the China tariffs. But China tariffs got the spotlight, but corporate profits did not. Go figure!
        https://fred.stlouisfed.org/series/CP/

        But who’s paying attention? Economists track wages and some commodities closely for signs of inflation. But who’s tracking and publishing decisions made in corporate suites to exacerbate inflation? In particular, who’s tracking the pricing and rising margins of ubiquitous oligopolies which are not subject to the same pricing constraints as companies that have to compete to make money? Ironic that’s it’s the Wall Street Journal that was the one to perform that public service!!!

        Such tracking sounds like a fruitful start-up project for a graduate student, though it certainly would not help him/her befriend potential employers.

        Reply
        1. pgl

          Let me help you read your own graph. The absolute dollar value of profits is 35% higher than they were in 2018 but this is not the same thing as profit margins. Profit margins are defined as profits/sales – do you need me to buy you Accounting for Dummies? Now do some real research and figure out how sales today compare to sales two years ago. Once you do – your preK teacher can help you with the basic arithmetic.

          Reply
        2. pgl

          “A 5% price increase would rival the impact of the China tariffs.”

          Because 5% is approximately 25% to someone who flunked pre-K arithmetic!

          Reply
    3. pgl

      Follow the links in your story and you will find something dated 11/23/2021 on the Justice Department’s website which starts with:

      The Department of Justice filed a civil antitrust lawsuit today to stop United States Sugar Corporation (U.S. Sugar) from acquiring its rival, Imperial Sugar Company (Imperial Sugar). The complaint, filed in the U.S. District Court for the District of Delaware, alleges that the transaction would leave an overwhelming majority of refined sugar sales across the Southeast in the hands of only two producers. As a result, American businesses and consumers would pay more for refined sugar, a significant input for many foods and beverages. “Robust antitrust enforcement is an essential pillar of the Justice Department’s commitment to ensuring economic opportunity and fairness for all,” said Attorney General Merrick B. Garland. “We will not hesitate to challenge anticompetitive mergers that would harm American consumers and businesses alike.”

      Nothing can be done to stop increased market concentration. The Garland Justice Department’s anti-trust lawyers and economists must be falling on the floor laughing at your comment!

      Reply
      1. pgl

        This Justice Department statement noting how it will block the proposed merger in the US sugar industry has a nice discussion of the players this market, which is a good thing as it seems these companies are all now privately held. Which means no financial disclosures over at http://www.sec.gov.

        The only thing I would add to their discussion is the role of US tariffs on sugar imports. As Jeff Frankel recently noted – allowing more free trade could bring down prices in certain sectors. The world price of sugar is much lower than the price of sugar in the US even before the proposed merger.

        Reply
    4. Moses Herzog

      DIdn’t know David Dayen was working at American Prospect now. Hope that’s where he wants to be, I’ve always found him to be one of the better journalists covering finance out there.

      Reply
  9. pgl

    “Over 100 companies show profit margins of 50 percent or more above those 2019 levels.”

    Now that is a headline grabber by your author here. He decided to note P&G but I suspect his research skills failed him here. Not that P&G is not incredibly profitable as its operating margin averaged a staggering 22% over the last three years. Its profit margin varies a bit by year being 20% in 2019 and 23% in the most recent reporting. But that is not a 50% increase for his prime example.

    P&G has always used its market power to exploit high margins. Unilever – its only real competitor does too. And these two multinationals are even ripping off consumers in places like Africa.

    Of course this is old news for anyone paying attention. But of course JohnH would have us believe that people like me neither know about this nor care about this. It is indeed his parade to make such insulting and stupid claims buttressed by writings from people who are far behind the rest of us.

    Reply
  10. ltr

    https://fred.stlouisfed.org/graph/?g=EqSq

    January 30, 2018

    Labor Share of Nonfarm Business Income and Real After-Tax Corporate Profits, 2017-2021

    (Indexed to 2017)

    Increase in labor share of income:

    103.0 – 100 = 3.0%

    Increase in real profits:

    128.1 – 100 = 28.1%

    https://fred.stlouisfed.org/graph/?g=mQUa

    January 30, 2018

    Labor Share of Nonfarm Business Income and Real After-Tax Corporate Profits, 2000-2021

    (Indexed to 2000)

    Decline in labor share of income:

    91.6 – 100 = – 8.4%

    Increase in real profits:

    280.3 – 100 = 180.3%

    Reply
    1. Moses Herzog

      Poetic justice for the Australian government leaving Taiwan high and dry??
      https://www.theguardian.com/world/2021/nov/25/honiaras-chinatown-targeted-as-violent-protests-break-out-for-second-day-in-solomon-islands

      No wonder so many conspiracy theories floating around on Chinese spies infiltrating many parts of the Australian government. I’m wondering how Xi Jinping thinks many nations will react towards local Chinese if they were to attempt to invade Taiwan?? Is that worth it to them?? Or do they just have no concern/care for expats?? I wonder……..

      Reply
  11. pgl

    Newsweek decides to present both sides of this debate between the sugar companies wanting to merge and the Justice Department:

    https://www.newsweek.com/doj-sues-stop-us-sugar-buying-rival-cites-already-cozy-sugar-industry-1652617

    U.S. Sugar has the gall to claim this merger is not anti-competitive but is motivated by a need to improve supply chain logistics. In other words, these corporate liars want us to believe that the merger will increase production and lower sugar prices. Seriously?

    Now they plan to fight the government in court. Which means it becomes a battle of economic “experts”. No serious agricultural economist is going to lie for these corporate thieves. But they will reach into the bottom of the barrel and pay some pseudo-economist to do some sort of garbage analysis.

    Hey – maybe U.S. Sugar will have Princeton Steve call sammy and CoRev to help him prepare their “economic” report. Stay tuned as this could be fun!

    Reply
    1. pgl

      Anyone serious about anti-trust enforcement would spend less time dishonestly bashing the economics profession and more time reading works like this one:

      https://www.antitrustinstitute.org/work-product/antitrust-enforcement-report/

      By 2016, economic research had shown we were seriously underenforcing anti-trust and Trump said in the 2016 campaign he would change that. But under his four years in office, we saw almost nothing in terms of anti-trust enforcement. OK – Trump lied. What’s new?

      Maybe the Garland Justice Department is stepping up to the plate. Let’s hope so.

      Reply
  12. pgl

    JohnH wants us to believe that economists are not aware of oligopoly power. I guess JohnH does not know who Jean Tirole is or what he won the Nobel Prize back in 2014:

    https://www.nobelprize.org/prizes/economic-sciences/2014/tirole/facts/

    Tirole also wrote an excellent textbook call The Theory of Industrial Organization. It was not the first book on this topic that dates back generations with lots of economists specializing in a topic that JohnH thinks few economists even care about.

    Look – this is an important policy issue. I just wish the economic know nothings such as JohnH would spend a little time reading all the excellent economic work on this topic.

    Reply
    1. JohnH

      Nobody said that economists are not aware of oligopoly power. But they seem to mostly ignore it when considering the causes and sources of inflation…as evidenced by the fact that wages are tracked several different ways. But oligopoly profit margins don’t seem to be tracked at all, despite the fact that it is deliberate boardroom decisions that lead directly to rising prices that affect much of what we purchase.

      We can’t discomfit the robber barons, can we?

      Reply
      1. pgl

        ‘Nobody said that economists are not aware of oligopoly power.’

        We finally agree on one thing – you certainly are a nobody. We have asked you many times to cease polluting this blog with your incessant bloviating BS. But you persist.

        Reply
        1. JohnH

          Wow! pgl has to go back to 1977 to find something about oligopoly profits…hardly a piece found in any mainstream media to explain today’s oligopoly price gouging.

          Where are the contemporary economists who are explaining oligopoly pricing power to the general public?

          Reply
          1. pgl

            Maybe you forgot to read this key sentence: “It was, however, the obvious flaw that monopolies do account for higher prices but not for their continuous rise.”

            I was in graduate school back in the late 1970’s so I know the extensive research we were doing on this topic. A topic that you accuse me of not caring about – which is your usual juvenile garbage about people’s motivations. It is garbage and it is highly insulting. Especially from someone who clearly has not taken even a freshman course in economics.

            But do bore us with your incessant stupidity as well as your false and insulting accusations. It is the only thing you know how to do.

      2. pgl

        Now you may think no one besides you has ever thought about whether oligopoly power is associated with inflation. But of course you are only showing your incredible ignorance. A nice place to start the research on this topic might be this paper entitled Oligopoly and Inflation:

        https://link.springer.com/chapter/10.1007%2F978-1-4613-4231-1_5?utm_medium=affiliate&utm_source=commission_junction&CJEVENT=478c190e4e9f11ec824906870a82b824&utm_campaign=3_nsn6445_brand_PID100357191&utm_content=de_textlink&?utm_medium=affiliate&utm_term=PID100357191

        Reply
      3. pgl

        “oligopoly profit margins don’t seem to be tracked at all”

        My Lord – you say the dumbest things. Like the operating margin for companies like P&G and Unilever are not recorded anywhere. Dude – there are all sorts of reporting agencies that track operating margins not only annually but also quarterly. Oh wait – these margins are not reported on a daily basis. NOW we see what you mean. DAMN – you are even worse than rsm.

        Reply
        1. JohnH

          Show me the report or graph that shows the Oligopoly Profit Index…

          As I have said several times in this thread, several factors that could impact price levels are tracking and reported regularly–wages, housing prices, transportation costs, commodities prices. etc. But the elephant in the middle of the room is oligopoly profits. And oligopoly profits can be a significant contributor to inflation in an economy where oligopolies are ubiquitous.

          Yet it seems that most economists turn a blind eye to this significant factor, neither mentioning it nor noticing the lack of government data when it actually happening. Sure, the theory of oligopoly is well known and teaching about it is standard. But when it comes to relating economic theory to current events, economists get an ‘F’ at just at the moment when the public could really benefit from an obvious teaching moment.

          Reply
          1. pgl

            “Show me the report or graph that shows the Oligopoly Profit Index”

            Lord you are dumb. I see – if something is not labeled with your latest pet stupidity it does not exist. Can you PLEASE stop polluting this blog with your nonsense? DAMN!

          2. JohnH

            Pgl can’t produce anything that shows aggregate oligopoly profits over time! Why the lack of attention for economists and government statisticians?

        1. JohnH

          It is certainly nice that the CEA reported on oligopolies five years ago: “ Recent indicators suggest that many industries may be becoming more concentrated, that new firm entry is declining, and that some firms are generating returns that are greatly in excess of historical standards. In addition, the dollar volume of merger and acquisition activity is at record levels.”

          It would be nicer if economists, policy makers, and public intellectuals took note of oligopolies’ contribution to the current inflation.

          It would be nicer still if they took advantage of the current situation to enlighten the public about the causes of inflation beyond wages, commodities, housing costs, etc. Except for rare exceptions, I do not see this happening. And those who are speaking out about monopoly pricing are not economists…Robert Reich, for example: “ Robert Reich: What’s Really Driving Inflation? Corporate Power. The biggest culprit for rising prices that’s not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices..”
          https://www.eurasiareview.com/11112021-robert-reich-whats-really-driving-inflation-corporate-power-oped/

          Isn’t this economists’ turf? Why is corporate power’s contribution to inflation not being widely talked about in the media that the public pays attention to?

          Reply
          1. pgl

            Five years ago? How did we know you pull that chestnut of yours. Oh gee, we had your boy Trump running the show for 4 years and of course his incompetent and corrupt CEA did nothing. We covered this already – or did you not read that link I provided? And Biden’s CEA is once again taking up the mantle – in case you failed to noticed that too.

            Look – you have gone beyond stupidity to sheer and utter dishonesty.

          2. pgl

            “P&G is raking in huge profits. In the quarter ending September 30, after some of its price increases went into effect, it reported a whopping 24.7% profit margin.”

            You know it would be nice if people knew how to check 10-K and 10-Q filings. As I have already noted, P&G generally has a 22% operating margin. That this margin for a 3-month period rose to 24.7% should be no surprise to people that actually paid attention. But I give Reich a little credit – he notes high margins have nothing to do with inflation. P&G’s margin has been high for a long, long time.

            Yea – this fluff piece was not on the front pages of the NYTimes. The 2016 CEA report that you missed without reading it was not on the front pages of the NYTimes. So to a lying turd like you – they do not count.

    2. JohnH

      Democrats’ culpability in the supply chain mess: “The system that the Biden administration inherited….is the consequence of the orgy of deregulation of industries that are part of what should be a kind of public utility—the nation’s logistics system.

      Disgracefully, most of that deregulation occurred under Democratic Presidents Carter and Clinton. Under Carter, the Motor Carrier Act of 1980 deregulated over-the-road trucking and turned a industry of well-compensated, mostly unionized, reliable blue-collar workers into a patchwork of independent contractors with less reliable trucks and much lower incomes. The shortage of truckers is entirely the result of this deterioration.

      Under Clinton, Congress and the White House, after extensive industry lobbying, passed the Ocean Shipping Reform Act of 1998. This law removed the public safeguards that required ocean shippers to operate with transparent rates for all users, and allowed them to operate like a private cartel.

      The container ship industry booked net profits in the third quarter of 2021 of a mind-blowing $48.1 billion, a ninefold increase over profits in the third quarter of 2020, which were already a record. The industry reported that net profits were a staggering 42 percent of gross revenues, also a record.”
      https://prospect.org/economy/the-supply-chain-mess/

      Yawn..just another oligopoly…nothing to see here…

      Reply
      1. GREGORY BOTT

        No, it was a steady stream between 1976-95. Just not “Democratic Presidents”. Keep on telling your story Johnnie.

        Reply
        1. JohnH

          How many times can you deregulate the trucking an shipping industries? Not many. And Kuttner shows who did it (Carter and Clinton.)

          Reply
      2. pgl

        Gee – Anne (ltr), Barkley, and I have been talking about logistic costs for months. You finally chime in? Gee!

        Yes their profits are up this year but since you are too stupid to see past your long lying nose, let me remind you that shipping companies had been losing money for years.

        Reply
        1. Barkley Rosser

          pgl,

          Apparently shipping rates across the Pacific have recently declined by about 25 percent. Looks like more of that disinflationary stuff going on out there that is not getting reported on much, the press so busy hyping inflation with Biden’s poll numbers on the economy tanking despite the lowest layoff numbers in over a half century.

          Reply
          1. pgl

            JohnH’s new guru sees oligopolies everywhere. If the shipping sector is an oligopoly, it may be the worst run oligopoly ever. Shipping rates spiked some 13 years ago as the commodity boom got crazy but then the industry overinvested in capacity which led to very low shipping rates for over a decade.

            Yes shipping rates once again spiked but as you note, these are already coming back down. Who is running this incompetent oligopoly. Oh wait – Wilbur Ross owned a shipping company so maybe this sector is being run by Trump’s favorite incompetent boobs!

          2. pgl

            Back in the spring of 2016, Clarksea wrote this humorous discussion:

            https://www.clarksons.com/news/the-higher-you-get,-the-further-you-fall/

            The shipping rates today did really spike but nothing in comparison to the spike back in 2008 during the height of the commodity boom. But as Clarksea notes, shipping rates later crashed leading to an extended period of low prices. Another crash could easily happen.

            And JohnH is under the illusion that the shipping sector is a highly effective oligopolist cartel? Yes – he is beyond delusional!

          3. JohnH

            “Container shipping rates have declined in recent weeks from record peaks reached in September and October. Still, a Freightos index of transpacific rates where demand is the strongest are almost 300% higher than a year ago.”
            https://www.supplychainbrain.com/articles/34120-container-shipping-rates-may-take-two-years-to-fall-to-normal

            Even OPEC, a notorious cartel, can’t always maximize its prices. BTW it was Robert Kuttner who pointed out the effects of the shipping cartel: “ “The congestion that has caused inconvenience and inflation for the rest of us has been a source of increased market power and price-gouging for the ocean shipping cartel—price hikes that are part of the inflation.”
            https://prospect.org/economy/the-supply-chain-mess/

            But when it comes to cartels and oligopolies having pricing power, pgl is in full denial!!!

          4. Menzie Chinn Post author

            JohnH: I have never seen pgl write in favor of oligopoly, or monopoly power. Please provide a citation (specific URL would be nice) that supports your allegation.

          5. pgl

            “Even OPEC, a notorious cartel, can’t always maximize its prices.” – JohnH

            My Lord – everyone knows OPEC is a notoriously ineffective cartel. Shipping is even more ineffective at keeping prices at elevated levels. But we do need to stop paying attention to an utter moron like JohnH as laughing at his intellectual garbage is beginning to make my side hurt!

      3. pgl

        Barkley has already began to dismantle this canard. How do you wake up each morning with all those oligopoly ghosts haunting your bed room?

        Reply
        1. JohnH

          Why is pgl so intent on defending oligopolies and their price gouging?!? Just what you’d expect from a corrupt, Democratic centrist partisan hack!!!

          Reply
          1. pgl

            I’m not defending oligopolies and you know it. Lying 24/7 I guess is your excuse for writing things that are both incredibly STUPID and incredibly dishonest.

            Look dude – you have become more boring than watching the grass grow. Please find another blog to pollute. DAMN!

  13. ltr

    http://www.news.cn/english/2021-11/26/c_1310334955.htm

    November 26, 2021

    Turks reeling from soaring energy prices amid currency plunge

    ISTANBUL — Long queues snaked around gas stations in Turkey’s largest city and financial hub Istanbul on Wednesday evening as exasperated drivers rushed to fill their tanks ahead of a fresh hike in gasoline price.

    “This is depressing,” Ahmet Sari, a taxi driver, told Xinhua. “Almost every week, there is a hike. That reminds us of the 1970s,” he said, referring to the years when common goods including gasoline were hard to come by due to economic and political turmoil.

    The Employers’ Union of Energy, Petrol, Gas Supply Stations said gasoline prices would rise by over 1 lira (roughly 0.083 U.S. dollars) per liter from midnight, the latest in a slew of price hikes as the collapse of Turkey’s currency, the lira, and rising global energy prices combined to push up the market.

    “Regular people are the first victims of price hikes. Let’s hope that we will overcome these hard days, but it is very difficult,” the taxi driver lamented.

    Heavily reliant on foreign energy, Turkey imports over 90 percent of its oil needs and 98 percent of its natural gas from suppliers including Russia, Iran, Azerbaijan, Algeria, Qatar, and Nigeria….

    Reply
    1. pgl

      Their leader has a plan to lower inflation and reverse the currency devaluation – lower interest rates. Yes – he is that badly advised. Who is his economic team? Stephen Moore and JohnH I guess!

      Reply
  14. pgl

    This is why everyone hates the fans of the Dallas Cowboys. So much whining after their overtime loss yesterday about the number of penalties in the game (28). But wait half of those penalties were called against the Raiders. And now Jerry Jones has admitted that they discussed how this ref crew calls things like pass interference tightly in a pregame meeting. So which is it Jerry? You knew that this game would be called tightly and you still let one of your defensive backs commit four pass interference penalties? Worst coached team ever. Worst fans ever.

    https://www.espn.com/nfl/story/_/id/32716458/dallas-cowboys-frustrated-amount-penalties-ot-loss-las-vegas-raiders

    Reply
  15. pgl

    I was writing up a review of how a tax authority (Canada) lost a tax case to one of those slimy tax cheat shale oil multinationals (lots of boring legalesse) with my point being that the real issue might have been the fair market value of the Canadian operations at the time of the reorganization. Of course tax authorities are generally too dumb to go for effective approaches that require economic reasoning but I decided to see what I could find under shale oil valuation and Google found this interesting and timely discussion:

    https://oilprice.com/Energy/Crude-Oil/Why-US-Shale-Is-Refusing-To-Reinvest.html

    It seems shale oil companies are enjoying profits and lost of free cash flow under the current high oil prices but they are not reinvesting that in their businesses. Of course investment decisions depend on expected future cash flows and not current and past cash flows (yea I get a few of the trolls here still have not gotten this basic concept). But how could this be? Well maybe:

    (1) they are forecasting much lower future oil prices than are being forecasted by that “genius” who runs Princeton Energy Advisors; or

    (2) they see a serious push for climate change in the form of hefty carbon taxes imposed on their polluting junk.

    One can only hope!

    Reply
    1. JohnH

      Seems to me that that an article that I linked to a few threads ago made exactly the point that shale was not reinvesting. pgl responded by noting just how wonderfully profitable shale companies are! Of course, as the article implied, if they do start to reinvest, you can bet that OPEC and Russia will increase production to make investment in shale less attractive. Biden’s decision to lower prices by releasing oil from the Strategic Petroleum Reserve can’t sit well with likely shale investors, either.

      Of course, if Biden were really serious about oil prices, he would lift the stupid embargo on Iranian production, which, curiously enough, I never hear free trade fundamentalists complain about. Instead, China gets Iranian oil at deeply discounted prices. I guess China cares more about free trade than the US!

      Reply
      1. pgl

        There is a big difference between profits today v. expected future cash flows. Of course you flunked basic finance along with Princeton Steve.

        Reply
        1. JohnH

          “There is a big difference between profits today v. expected future cash flows.“ of course, Sherlock. And it was duly noted in the comment you tried to refute by calling attention to how profitable one shale company is today.

          Reply
      2. pgl

        ‘if Biden were really serious about oil prices, he would lift the stupid embargo on Iranian production, which, curiously enough, I never hear free trade fundamentalists complain about. Instead, China gets Iranian oil at deeply discounted prices.’

        Could someone remind this economic know nothing that oil is a world market?

        Reply
        1. JohnH

          Could someone please inform pgl the know-nothing that not all oil is traded on the world oil market. Some of it is on long term contract. China buys Iranian oil per an agreement that gives it a discount.

          “ China is stocking up on cheap Iranian crude, most recently securing long-term supply with a deal worth $400 billion, under which China will invest heavily in various sectors of the Iranian economy over the next 25 years and will in exchange receive access to a steady flow of cheap oil.”
          https://oilprice.com/Energy/Crude-Oil/China-Set-To-Buy-1-Million-Bpd-Of-Cheap-Iranian-Crude-This-Month.html

          If Biden seriously wanted to lower oil prices, he’d allow imports from Iran.

          Reply
          1. pgl

            Dude – you are really stupid. Of course there are long term contracts even in world markets. I did not say all oil is traded on the spot market. Maybe you want to consult the village idiot CoRev how future markets work. Now he has no clue but even he would seen you are quoting something written back on March 30 when oil prices are not what they are today. Oh – you forget to check the date of your own link! Typical.

            Or maybe you should consult with your BFF Moses who just linked to an interesting piece where the UAE is acting an entrepot for oil produced in Iran and consumed in China. Entrepots make commissions off these deals, which end up being ultimately paid by the importer.

            Now please stop proving you are the dumbest person ever as we already know. So stop embarrassing your own mother as I’m sure she is a nice lady.

          2. pgl

            “China is stocking up on cheap Iranian crude, most recently securing long-term supply with a deal worth $400 billion, under which China will invest heavily in various sectors of the Iranian economy over the next 25 years and will in exchange receive access to a steady flow of cheap oil.”

            She never defined “cheap” in terms of dollars per barrel. Now remember at the time she wrote this even the spot price was only $60 per barrel. Of course such matters as dates fly right over the head of poor JohnH.

            But could there be some quid pro quo. Iran wants infrastructure investment so maybe if China subsidizes this Iran can subsidize oil. It all sounds very Trumpian to me. Almost socialistic in fact. But JohnH wants to call this the free market at work. He is that incredibly STUPID!

          3. CoRev

            PGL, “Dude – you are really stupid. ” Since when does a( LONG TERM- capitalized just for you) contract referenced in a March 2021 article end? Shouldn’t you ask Menzie to erase or preemptively edit this ignorant comment?

          4. baffling

            if iran is exporting its oil to china at a cheap price, not sure exactly how allowing imports from iran would do something to lower oil prices? iran oil is entering the world market at a cheap price. that should have the effect of lowering the price of oil. it would be different if iran oil was not exported to the rest of the world. but if it is shipped to china, that is one less barrel china must purchase at a higher rate in the open market. if the embargo were truly effective and iran did not export oil, then prices should be higher. but that does not appear to be the reality.

        1. pgl

          CoRev
          November 29, 2021 at 4:40 am

          Leave it to someone who proved he does not get forward contracts to defend JohnH on this. Can we get Sammy to join you two so we have the Three Stooges?

          Reply
          1. CoRev

            PGL pointing out your ignorance re: contracts is not defending John H. Your commenting is evidence enough to prove ignorance.

            BTW, could you point all of us to the market where (INTERNATIONAL AGREEMENTS like that oi9l agreement between Iran and China CAPITALIZED JUST FOR YOU) are traded?

          2. CoRev

            PGL pointing out your ignorance re: contracts is not defending John H. Your commenting is evidence enough to prove ignorance.

            BTW, could you point all of us to the market where (INTERNATIONAL AGREEMENTS like that oi9l agreement between Iran and China CAPITALIZED JUST FOR YOU) are traded?

      3. pgl

        “China gets Iranian oil at deeply discounted prices.”

        Do they? Did you check the data? Of course not so permit me. The Dubai Fateh price for October 2021 was $81.22 per barrel whereas FRED tells us the WTI (US) price for the same period was $81.48 per barrel.

        WOW – Golly gee! A $0.26 discount is really really deep if one is really really dumb like JohnH!

        Reply
        1. CoRev

          PGL WOW – Golly gee! How ignorant of you to ignore the fundamentals of having a contract. Y’ano, those basic terms like duration, prices, amounts, delivery, etc. Not spot market prices at …!

          Reply
          1. pgl

            So you agree with JohnH that the existence of futures markets makes oil not a world market? Relax CoRev – JohnH may be incredibly dumb but you still get the gold for stupidest man alive!

          2. pgl

            Damn – you sure do write a lot of gibberish. But this level of gibberish shows that you having no effing clue what the discussion between me and your fellow idiot (JohnH) was even about.

            Tell you what – ask JohnH out to dinner. I’m sure the waiter will fall on the floor laughing at your dinner conversation.

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