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The markets say one thing, but grocery receipts say another. Consumers are still hurting, and most choose not to look beyond today and their own pocketbooks.
But grocery receipts are not an indicator of inflation, only of corporate greed and record profits. The Democrats need to a better job pointing the blame where it really lies.
I think one caveat here (and I’m not disagreeing with you, just adding a bit of clarification) is that the grocery stores aren’t the ones engaging in this. Generally, they have pretty tight profit margins. The massive growth of Aldi and other discount grocers in the USA over the past 10-20 years has made the profit margins remain tight. It’s the upstream producers where you see more of the greed.
Most people reading this probably haven’t even heard of a company like Cargill, even though they control a massive chunk of your meat.
Edit: maybe I should have said they produce most of your meat (or the plurality, not sure the exact numbers. They’re the biggest in North American beef, maybe other meats too)
I work in the corporate office for a grocery, you're not wrong at all chief.
This entire year one of our biggest corporate goals has been how to either drive down prices for our customers or how to increase value for them so that they'll feel their dollar went further.
Revenue is not profit. You’re quoting revenue to make the situation look more extreme than it is. That number is not profit. You’re also cherrypicking a top performer instead of looking at industry trends. Publix, in my experience (only visit the south, don’t live there), is a higher end store.
Kroger lost money this quarter. Profit was negative.
It’s also not so straightforward for a number of reasons. Grocery consolidation is way up, so operating revenues go up because there are more stores in each brand’s portfolio. YOY growth is misleading, you should look at profit per store to get a better grasp on a trend. You’re also looking at an industry heavily impacted by the pandemic (certain chains like Walmart and Amazon saw more grocery growth during the pandemic for obvious reasons)
what do you think "inflation" means to consumers? it's the increase over time of the cost of the things they buy. Nobody cares if it's coming from corporate greed or climate change or whatever else. They only care that they've already been living pay check to pay check and now they're cutting back on food into ever more shitty options.
or housing. or any of a dozen other necessary-to-live things.
The Democrats need to do a better job at giving people the money they need to get what they need, and controlling the out-of-control plutocrats wringing every last bit of spare change from the rest of us.
"Ok GOP, we'll cut our yearly deficit by 60% just by only giving the welfare queen confederate states $1 back for every dollar they contribute in taxes, instead of the $6 that South Carolina gets. Pull yourselves up by your bootstraps and start turning a profit."
"Hey, Joe Manchin: if you don't offer your full-throated support to Build Back Better, we're cutting off all Federal aid and investment in West Virginia, and we're going to run nonstop ads telling your constituents why. Also, we're going to break up your daughter's pharma company."
Time for some LBJ shit. But they'll never do it, because they're actually conservatives too.
A lot of people want prices to return to what they were before the pandemic. But that would be deflation. While the prices would get lower, if you actually managed to push the economy into deflation it would be an economic catastrophe. And the lower prices at the grocery store would be little comfort with massive job losses and the economy in free fall.
What people should want is for inflation to return to its steady slow rate. Which it has. The month to month inflation was 0.2% compared to a month prior on September 2023. Going forward that would imply a rate of 2.4% over the course of the next year, very close to the 2% inflation target. For October the month to month rate was flat or slightly negative. The inflation number reported in the news always is very misleading, that tells you the total amount of inflation that occured over the past 12 months (3.2%). But it was actually 0 from September 2023 to October 2023. When people hear those headlines they think it means prices raised 3.2% again over the last month, which is not the case.
The remarkable thing is that inflation was slowed to this extent without the economy going into freefall with soaring unemployment or other problems that can happen with raised interest rates. They seem to have struck the perfect balance to wrangle inflation but prevent a recession at the same time.
Wage growth has also increased and is now growing faster than inflation. That's what you want! For the wages to catch up and make the higher prices a moot point. A deflationary spiral that lowered prices would be devestaring for the economy and most people would actually end up way worse off.
Outside of a socialist centrally managed economy with price controls and production control etc which has its own issues, I don't know how they could have done a better job than this coming out of the inflation problems created by covid and doing it all without going into recession. But the popular perception is just, why isn't everything cheaper again, I want everything cheaper again, must be Biden's fault, I guess. Even though things getting cheaper again isnt realistic, and would likely be devestating for lots of other reasons that would hurt people if it actually was happening.
I hear about how deflation is supposedly the death knell for an economy, but have never heard an actual explanation for why. Inflation just seems preferred since it gives an invisible paycut to workers and allows holders of assets and debt (e.g. overwhelmingly the rich) to benefit at the expense of the value of money.
The idea is that with inflation, money today is worth more than tomorrow, with deflation it's the opposite. So, in an inflationary regime, you'll spend money before it loses value, either by buying things, or buying stocks AKA investing. In a deflationary regime, money gains value, so people keep it, nobody buys, nobody invests, and the economy starts shutting down.
Inflation is better for people in debt since it makes it easier to pay back; a lot of farmers in the late 19th and early 20th century pushed for inflationary policies in part to make it easier to pay off bank loans.
Deflation is bad for two reasons. First, as mentioned, is that it doesn't encourage people to spend sooner in the market. Second is that it encourages investors to pull out their money from the market, since they may get better returns stuffing it in their mattress.
That only works for loans already taken out. A fresh loan will adjust to whatever the inflation/deflation rate is. Juicing the economy by helping out people who took out more money than what allows for a margin of error means we're just encouraging risky behavior. The reason for taking out a loan is that you expect that the money now will give better returns that just letting it sit. Let's say the deflation rate is 2% and you take out a loan at 1% interest. If you can't put that money to use better than growing at 3%, then it sounds like your business isn't viable anyway. It'd be like taking out a 5% loan at 2% inflation rate and failing to beat that.
If I buy stocks, I'm not technically investing in a company unless it was an initial sale of stock by the company and that usually isn't the case. Instead it's just speculation. So how is that different from letting it sit under a mattress economy-wise? Also, if you buy a stock and it goes nowhere, you've actually gained by whatever the deflation rate is, but under inflation, you've lost by however much the inflation rate is. Seems like inflation would only encourage people to pursue more aggressive (i.e. risky) returns.
No one is going to lend you money at an interest rate lower than the deflation rate, ever.
Every stock purchase is an investment in a company, always. That's literally what you're buying
The money then gets spent, which does not happen under your mattress.
You've got some very foundational aspects of this entire process quite wrong.
Why wouldn't they lend you money at 1% when the deflation rate is 2%? Their money is worth 2% more plus they get 1% more from you.
Not every every stock purchase is an investment in a company, because you're buying off someone who is not the company. The company doesn't make that money. It's kind of like used sales vs new sales. Again, only when the company issues new shares or does an IPO do they make money off stock sale.
If I buy a stock and sit on it, that's essentially money sitting there. Whether it's cash or a digital record claiming I own X number of shares in a company, it's not doing much.
If I've gotten foundational aspects of this process wrong, you've yet to demonstrate how.
There are only a set amount of shares. Shares being in demand increases their price. I am sure you can see him w this does financially benefit the company.
Yes an IPO is when the most stock is sold, but new shares happen all the time. It's disingenuously pedantic to suggest purchasing stock is not an investment in a company, by both literal and figurative definitions.
Sure, bud, in a regulated market without exemptions for market makers who can naked short sell (crate synthetic shares that do not exist) for the sake of liquidity. Or how about 90% of our market being traded off the tape without affecting prices?
He is pointing out past ipo you are speculating on growth, which is what trading is speculation, not guaranteed returns.
Purchasing stock off a secondary exchange is about as much investing in a company as purchasing a used game and hoping to resell it for a higher price. The company gets no money from these transactions. It's just glorified gamblers making money.
That's a gross over simplification to the point of being untrue. Besides the obvious facts that many companies continue to issue new shares on a regular basis, companies absolutely care about their stock prices for a variety of reasons, and not just so stockholders make money.
Start here if you really want to know more about how a company leverages its stock price, even when not selling more shares at the moment.
https://www.investopedia.com/investing/why-do-companies-care-about-their-stock-prices/
https://www.usatoday.com/story/money/columnist/krantz/2012/10/14/falling-stock-price-hurt-investors-company/1624761/
https://fairmontequities.com/how-does-a-decline-in-share-prices-affect-companies/
Not that often really, because shareholders can vote on those propositions and they generally would rather open a short position and gain back their investment then speculate on future growth prospects that are looking shaky needing more investment. More common in massive companies, you see share buybacks to entice big investors with the allure of we are doing well so we will buy back shares periodically to raise your investment. They do it enough and eventually as an investor you know they are going to offer more shares at some point so that control of the board does not become too consolidated, start a short position at that point wait for the next bottom and buy in before the next buyback to play both sides.
Except stock price is based on a number of factors and does not necessarily match demand.
https://www.economicshelp.org/blog/1888/economics/deflationary-spiral/
https://www.investopedia.com/terms/d/deflationary-spiral.asp
This is a good explanation. And the great depression involved deflation if that gives you an idea of how bad it can be. What happens basically is if you need something in an inflationary environment, it's best to buy it now. It's likely going to be slightly more expensive over time anyways.
In a deflationary environment, the logical thing for any one person to do is to wait as long as possible to make any purchase of an item or service. Why should I buy it if it'll get cheaper over time? I'll just wait. So this is a problem, any transaction that involves the transfer of money, people are avoiding if possible. So revenue to employers is plummeting, they start firing people, they don't need as many now. People have even less money than before, prices sink lower to try and attract business because everyone is running low on cash now, and around and around it goes. Businesses are going bankrupt and closing up, leading to more job losses. There's tons of people looking for work and not many jobs, so pay decreases because there's way more workers than needed.
If you have any sort of debt (face it most of us do), deflation is also devastating. Normally inflation helps with debt by making the debt value decrease relatively over time, it gets easier to pay. In deflation the opposite is true, and it gets harder and harder to pay over time. If deflation was like 4%, well then add another effective 4% interest to any rate to get the true interest rate on debt you already own or any new debt you take out. So now it's extremely difficult to get credit or loans. People are mass defaulting on loans. More people losing jobs. Housing, cars, new businesses, storefronts, retail space, building projects, government projects, anything that relies on financing collapsing because no one can afford the debt. Even less money flowing into economy, etc etc. There's more problems that crop up too.
It's a feedback loop of an economic death spiral that can be hard to break out of, as seen in the great depression. Barring a radical restructuring of the entire world economic system or something, the best place to be in for most people is where we are now, a small amount of yearly inflation (~2%) with workers highly in demand so wages are rising.
Any economic downturn will involve the risk of deflation because lack of demand will cause prices to go down, but that is merely a symptom, not the cause of the great depression. While you talk about the logical choice of waiting for purchases, this doesn't work out the same way in real life because people generally just buy when they want something. A key example is technology. Technology is inherently deflationary because it's designed to be cheap to manufacture, so initial high prices are mainly to recoup R&D costs plus profits and it should only get cheaper from there, plus technological advances mean that you get a better product than before. However, people and businesses don't just wait around forever to purchase computers, TVs, phones, etc. Technology is the largest sector of the S&P 500.
As for debt, if deflation is expected then it'll be factored into the interest rate. What's the difference between a 4% loan at 2% inflation and a 0% interest rate at 2% deflation? The 2% inflation rate target is completely arbitrary, so why not target a 2% deflation rate? Consistency is key.
You pointed it out yourself, deflation is a symptom of bad economic downturns. How would you propose causing deflation without an economic downturn or some kind of intrusive economy wide price controls and rationing? A deflationary environment is deflationary because no one can afford to buy anything so prices are dropping to try and compensate. And once deflation is established it's very hard to break out again (see how long the great depression lasted). It's a terrible situation.
If they kept driving interest rates even higher until they got deflation, the reason would be because they got interest rates so high the entire economy has gone into a giant recession. You can't just "set a 2% deflation target." When the fed is talking about an inflation target, it's adjusting the interest rate to get there. I mean you could set that target, but you'd be waiting until the interest rate got so high the entire economy had crashed before you got there. You'd be shooting yourself in the head to fix a headache.
You're also ignoring all the many existing debts with fixed interest rates, a deflationary environment would be devastating for student loans. The corona virus period inflation has actually helped them and devalued any debt from prior to this period, making it easier to pay off in the future.
Boy are you underselling those problems.
Oh I know, tons of issues. It wasn't supposed to be the primary topic of the comment, was just pre empting the "well actually" comments from the relatively high amount of communism and socialism proponents on lemmy. I'm speaking about how this all works within our current capitalist economy and system. I don't think instituting price controls is a good idea. There are better ways.
The economy is not even close to being the main priority for me when I vote. I'm pissed about things like Roe and Jan 6.
And I'm pissed that the US does not offer universal healthcare, universal college-level education, universal PTO, universal family leave, etc.
You know, basic things in every other developed country in this world.
Zero chance I'm ever voting for a Republican. Democrats down the ballot for me.
I'm voting D too for the time being, but the Dems are never going to give us those things either.
The best Dems will offer is BS like means-tested limited family leave if you work for 3 years in an underprivileged school district first and then apply for a special program that will offset 25.7% of your lost wages via tax credits that can only be applied to the first $34,000 of income including HSA contributions but crediting back via deduction the first $500 spent on diapers as long as the diapers were 70% manufactured in the US blah blah blah
This Democratic party does not want universal healthcare. At best, they will grudgingly support universal "access" to healthcare. They do not want universal free college, nor free PTO, because that runs counter to the interests of their largest donors.
The best we can say about the current Democratic party is that they will, at times, pause the active arson that the GOP is inflicting on this country... maybe, sort of. They could have added DC and PR as states in the 2021-2022 session and given themselves a fighting chance in the Senate, but I guess they just kinda forgot to get around to it.
They exist to be a placeholder for whenever the GOP loses power, and a continuous fundraising lifestyle brand the rest of the time.
I don't think that's true. Lots of Dems support Medicare for All, which would be a good step in the right direction toward universal healthcare.
I also see the Biden admin do everything it can to get as much student loan relief as possible. But they are blocked at every turn by Republicans and Trump's Supreme Court. I appreciate Biden's efforts.
They also attempted to instate family leave and a child credit during covid. Again blocked by Republicans.
I hope to see them continue their attempts and hopefully succeed sooner rather than later.
I think most Democratic party voters want universal healthcare. I think most Democratic party politicians do not.
I don't think cynicism will bring us any further. I believe it can be done if we vote for people who share the vision. And there are lots of people who share that vision.
But, of course, it's not going to happen if people end up voting for someone else on election day because "gas prices are a little high for my taste right now."
The best bet is to vote for enough progressive democrats that will support ranked choice voting and we get it. Once that happens we can build actual progressive platforms and parties but as it sits your not going to change the foundation of the democrat or republican parties. We need new ones and for the time being the democrats are allowing us to vote in more younger progressives and that may be the ticket to finally getting out of the US's trapped two party system.
I think you're right in the issue, prices are higher now vs recent history and that feels bad, but there is an aspect to that which is more perception than reality.
Wages have been rising faster than inflation for a year and a half straight now, and real wages are currently higher than they were in Q4 2019.
So yes things cost more, but as a percentage of typical wage, they actually cost less vs 2019. Just doesn't feel that way.
https://fred.stlouisfed.org/series/LES1252881600Q
The Fed's job is to defend and grow the owner class's wealth at everyone else's expense, full stop.