Inflation

[over9k]

from previous experience , wages ( rises ) lag inflation

one reason is you need the CPI rises to justify asking for the wage increase , so that makes wages at least six months behind

and most governments find it ' politically necessary ' to to fiddle with the CPI ( allegedly to reduce public panic . and voter alienation )
BUT if the masses have less disposable income .... what do they buy , and what do they resist buying ( at previous rates )

bingo

 

[Smurf1976]

from previous experience , wages ( rises ) lag inflation

Most of my working life has been under 3 year agreements which specifically preclude any consideration of being changed during that time meaning they're locked in.

There'd be a great many on those sort of arrangements in big business and government.

Within that structure as an individual you can negotiate classification but you can't change that classification xyz = $abc. The room to change that latter point is zero, it's set in stone down to the cent.

 

[divs4ever]

Most of my working life has been under 3 year agreements which specifically preclude any consideration of being changed during that time meaning they're locked in.

There'd be a great many on those sort of arrangements in big business and government.

Within that structure as an individual you can negotiate classification but you can't change that classification xyz = $abc. The room to change that latter point is zero, it's set in stone down to the cent.

i have usually worked outside that framework , and when there has been a formal wage agreement that rarely worked to the employee's advantage either ,

the upside of that is i frequently found a 'side-hustle ' to solve MY problems ( short-term or mid-term )

i made fluid and flexible work for me

 

[divs4ever]

THE US IS A LEVERAGED BASKET CASE - PETER SCHIFF #5385



DYOR

of course little of this is news to those who understand real economies

 

[ducati916]

It looks like everyone has forgotten about productivity. Most people do, so don't feel bad

There is always going to be increases in some part of a businesses cost base, the business that can counteract increases with other measures such as 'productivity' will be the most successful. These are the companies that investors look for.

The Key to Productivity

Explains how to measure and monitor productivity to improve your workforce.

www.netsuite.com

Productivity:



Moving in the wrong direction.

jog on
duc

 

[JohnDe]

Productivity:

View attachment 135992

Moving in the wrong direction.

jog on
duc

Better late than never, welcome to the party.

Of course it’s in the wrong direction, we have Covid, and before that we had poor policy from a few governments.

My point was only that all the recent posts had mentioned everything but productivity, which is one tool that can counteract inflation. Smart companies are and can improve productivity, find them and that’s a great investment.

 

[JohnDe]

This article is a few years old but still worthy of a read -

PRODUCTIVITY AND INFLATION

That inflation has costs is widely accepted. What is less clear is the path by which inflation generates these costs – there are many alternative theories. The interaction of inflation with the tax system, the reduction in the value of the price mechanism, the diversion of resources from productive activities to managing inflation, or even the cost of adjusting prices on menus have all been posited as costs of high inflation.1 However, quantifying these channels empirically is much harder than describing them theoretically. Regardless, whatever the channel of effect, they must all ultimately reduce output. And inflation’s negative effect on output is most likely to be reflected in lower productivity growth.2 Consequently, in considering the costs of inflation, the relationship between inflation and productivity is key.
This paper investigates this relationship without attempting to isolate the strength of any particular channel. Notwithstanding this, our results suggest something about the characteristics of the channel and we discuss these in some detail later in
the paper.

At the simplest level, broad historical correlations suggest a negative relationship between productivity and inflation (Table 1). Most OECD countries had low productivity growth and high inflation in the 1970s and, to a lesser extent, the 1980s. Productivity growth then generally increased through the 1990s at the same time as inflation generally fell.....

https://www.rba.gov.au/publications/rdp/2003/pdf/rdp2003-10.pdf

 

[mullokintyre]

One of the Myriad of reasons why goods are slow/hard to come by could be just plain theft.
Containers Busted Open

Mick

As a corrollary to this tweet comes the news that Union Pacific is threatening to move out of shifting stuff from LA because of theft.


A top Union Pacific Railroad official threatened to leave Los Angeles over the District Attorney's progressive measures to lower criminal theft offenses amid a wave of criminal gangs looting rail cars.

Adrian Guerrero, Union Pacific's director of public affairs, wrote a letter to LA County District Attorney George Gascón, denouncing the local government's relaxed criminal policies, or rather "well-intentioned social justice goals," as a catalyst for a wave of rail car thefts.

"We find ourselves coming back to the same results with the Los Angeles County criminal justice system. Criminals are caught and arrested, turned over to local authorities for booking, arraigned before local courts, charges are reduced to a misdemeanor or petty offense, and the criminal is released after paying a nominal fine," wrote Guerrero.

He said most criminals robbing trains search for Amazon and UPS packages, are released back onto the streets within a day.
Its the unintended consequences that just get you every time.
Mick

 

[over9k]

Standard democrat state going to hell in a handbasket then, what else is new?

Sea traffic will just get redirected as the costs of this crime continues to rise. Simple economics.

 

[JohnDe]

What affect on inflation will this cause -

January consumer confidence at 30-year low as Omicron spread smashes spending outlook

Consumer confidence has slumped to its lowest level for the month of January in the past 30 years, as a surge in Omicron cases dashes spending intentions.

ANZ and Roy Morgan’s weekly index of consumer confidence fell by 7.6 per cent in the past seven days to its lowest overall level since October 2020.

But ANZ head of Australian economics David Plank said the result highlights that concerns about Covid-19 have the potential to impact the economy if they linger.

“Consumer confidence readings are usually positive during the month of January and the level of 97.9 is the weakest January result since 1992, when the Australian economy was experiencing sharply rising unemployment,” he said.

“We don’t think the economy is as weak as these data might suggest, with the shock of the Omicron surge and strains on testing capability the key drivers of the fall rather than underlying economic conditions.”

The consumer confidence reading, which measures consumers’ feelings about current and future economic conditions, was below the neutral level of 100 at 97.9.

By region, consumer confidence is now below the neutral level of 100 in all states, but is above neutral in the territories.

All subindices registered losses, as the survey’s measure of “current financial conditions” dropped 11.3 per cent.

The outlook on “future financial conditions” fell 4.3 per cent, with 19 per cent of respondents expecting to be “worse off’ financially this time next year – the highest since September 2020.

Meanwhile, a separate ANZ survey revealed there are no signs of a recovery in spending among the bank’s customers.

Spending intentions in the first half of January slumped by 27 per cent, compared to the first half of December, with entertainment and travel the hardest hit sectors.

By contrast, previous years have seen 17-21 per cent declines over the same period.

ANZ senior economist Adelaide Timbrell said grocery purchases have improved and non-food retailing and dining has stayed somewhat stable at low levels through January.

More than 10 per cent of dining/takeaway expenditure took place online in the first half of January, compared to 4 per cent pre-Covid and 12-14 per cent during lockdown periods. Generally, the national seasonal decline over the festive period in dining spending is around 11-18 per cent, but this year it was 26 per cent.

Meanwhile, 25 per cent of the non-food retailing ANZ measured is now occurring online, which is a little higher than recent shares of online spending outside of lockdown conditions (20 per cent) but lower than the peak last year during Delta lockdowns (40 per cent).

Ms Timbrell said non-food retailing has also shifted down and online, but not as sharply as spending for other sectors.

MATT BELL BUSINESS REPORTER

NoCookies | The Australian

www.theaustralian.com.au

 

[Smurf1976]

At the simplest level, broad historical correlations suggest a negative relationship between productivity and inflation (Table 1). Most OECD countries had low productivity growth and high inflation in the 1970s and, to a lesser extent, the 1980s. Productivity growth then generally increased through the 1990s at the same time as inflation generally fell.....

A question there is which leads which?

Surest way to get frontline workers unhappy is to take something away. Doesn't matter what it is, if they're losing something then they will be unhappy.

Failing to increase pay in line with CPI is taking something away in practice.

Unhappy workers are almost always less productive than happy ones. Lack of enthusiasm, time spent chatting among themselves about the situation, if the situation escalates then it's union meetings during which work ceases and worst case actual industrial action becomes the outcome.

Note that I'm not advocating anyone goes on strike etc, just noting how these things can unfold.

At the moment everyone's too distracted by the pandemic but once that's in the past, other matters will come into focus and I'm expecting workers' pay demands to be among them.

 

[Smurf1976]

Unhappy workers are almost always less productive than happy ones.

Forgot to include staff turnover in that. Another productivity killer.

 

[sptrawler]

Forgot to include staff turnover in that. Another productivity killer.

Which tends to drive wages growth, as employers try to hold staff, especially when the job requires training.
If the workers personal cost keep rising, they will try to push for a payrise, failing that they will look for higher paying work.
The last thing a worker wants to do is go backwards, that usually involves losing something they have worked to purchase, if prices keep going up it is a certainty wages will follow.
The last few years rising prices of certain things, have been offset by prices of other consumables falling, with the supply chain problems pushing up the wholesale prices and fuel costs pushing up the overheads I can't see a lid being kept on prices.

 

[moXJO]

What affect on inflation will this cause -

NoCookies | The Australian

www.theaustralian.com.au

Rba will possibly hold off on a rate rise.

 

[over9k]

Meanwhile, brent crude closes in on $90 a barrel.

 

[divs4ever]

Which tends to drive wages growth, as employers try to hold staff, especially when the job requires training.
If the workers personal cost keep rising, they will try to push for a payrise, failing that they will look for higher paying work.
The last thing a worker wants to do is go backwards, that usually involves losing something they have worked to purchase, if prices keep going up it is a certainty wages will follow.
The last few years rising prices of certain things, have been offset by prices of other consumables falling, with the supply chain problems pushing up the wholesale prices and fuel costs pushing up the overheads I can't see a lid being kept on prices.

now maybe i have worked for some dumb companies , pay rises for solid staff seems to be rare

they just churn staff , the quality ones usually find a better position elsewhere , so the productivity falls when training the new employees

( have been at some places , i don't even try to remember their name for the first two weeks , just remember how many noses need to leave the building before i lock-up )

but sadly i never get to calculate the salaries , so the good staff move on ( as do i , in my own sweet time )

yes prices up ( because of supplier increases and costs ) but wages at the end of town i used to work were always lagging ( as was productivity , because the best staff moved on , unless they were trapped because they were substance abusers , and hardly anyone else would look past that )

 

[mullokintyre]

Was last night another turning point??
After the US holiday, a slew of data came out and most of it was not pretty.
Silver up a good chunk, gold virtually unchanged,
USD flight to safety back on, AUD down, DJIA down another 450 points.
Both 2year and 10 year TSY rates continuing their climb, the empire Fed Manufacturing survey had its third biggest month on month fall in history with a contraction at -7 versus the experts consensus forecast of +25.
An index of new orders dropped 32.1 points in January to -5, while the shipments gauge slumped 26.1 points to +1.
The average workweek and employment also showed a slower rate of expansion.
The price outlook also firmed, with indexes of future prices paid and received climbing the highest in data back to 2001.
Theres probably more, but I reckon thats enough for today.
Mick

 

[over9k]

However:

 

[JohnDe]

A nice short point of view -

 

[ducati916]

Better late than never, welcome to the party.

Of course it’s in the wrong direction, we have Covid, and before that we had poor policy from a few governments.

My point was only that all the recent posts had mentioned everything but productivity, which is one tool that can counteract inflation. Smart companies are and can improve productivity, find them and that’s a great investment.

While I do not disagree, improved productivity, in the face of a pernicious and (probably) increasing inflation, is not an easy task in the majority of sectors. All of the factors of production (land, resources, labour and capital (technology)) are all trending in the wrong direction.

A sector where the productivity will increase due to loss of purchasing power will be the commodity sector. Many of these have already made pretty big moves.

jog on
duc