> "Builders still have to clear their inventories of having purchased higher-priced lumber. It takes a while to clear the system," Lee said. "Yes, lumber prices from the mills came down dramatically over the summer, but that's unfortunately taken a while to reach the rest of the industry and consumers."
> Lee said when it comes to new home construction, pricing is being complicated by ongoing pandemic-related supply chain challenges. While difficulties related to lumber have eased, home builders are still dealing with delivery delays and price inflation on everything from plumbing and electrical products to kitchen cabinetry.
> "It doesn't compare to the three to five times price increases we saw with lumber, but I'd say on average, we're seeing 10 per cent increases on everything, including the kitchen sink," Lee said. "And we are still seeing delays on closings, just because of an inability to get products and materials."
Meanwhile... August 27th, 2021:
> "...households, businesses and market participants also believe that current high inflation readings are likely to prove transitory," Powell said.
I believe it. I am actually more worried about a deflationary spiral and an actual depression when the covid punch bowl gets taken away than moon growth for ever.
Things were shitty before covid happened, and many were expecting a recesion in 2020 before covid existed, markets siezed up late q3 19, and needed help then. The world has since been living on vast quantities of high grade heroin dished out all over the world, quite rightly by various central banks.
Only once the covid tide goes out we will see who has been swimming naked.
Why would they US government not be able to print its way out? I assume the US will be able to as long as it has the preeminent military and a stable society and court system, with relatively high levels of trust compared to other countries.
If another similar size country becomes a more stable option, then I would be worried.
Recesssions and depressions cant happen because the US can print money? Tell that to the history books. While you are there take a look at what causes an economic turndown, it tends to come on the back of massive spending, printing money, juiced growth and wars.
Politically, I do not think the US will let a deflationary spiral happen as long as it can print money. Sufficient portions of the population are fully invested in the equities market, and I expect the US to pull out all the stops to prop up their prices. They might take a hit for a couple years (although I bet even that seems politically unacceptable), but on a timeframe of more than a few years, I expect the US government to keep inflating, assuming they are able to per the conditions in my previous comment.
I am not certain they have as much power over inflation as they think. The US have been trying to drive higher inflation since 2008. Japan have been trying to drive higher inflation since 1990's.
Europe have been trying to drive higher inflation since 2014.
Printing money, making money free, paying people to borrow, buying assets, bonds, mortgages even stocks has been attempted. We have gotten to the point of literally putting money into peoples bank account, and finally have an inflation print akin to pre 2008 in the US and Europe.
I'd sadly say the US has (like any empire before it) used wars and similar methods to achieve the opposite. Not always effectively but still.
Check a lot of countries in the world peg to the dollar even when it doesn't seem economically sensible.
Remember when Japan in the 80's was forced to do technology transfers to the US, import minimum quotas of US tech and limit it's exports whilst adjusting their monetary policy to help out the US leading to a crash that preceded the lost decade?
It's not because they loved the US so much that they did such things.
> used wars and similar methods to achieve the opposite
Totally agree - but the bust comes after the war... based on the size of spending, one could make parallels between war and covid policy. A trick old as time to stir up a war to distract from political problems. Borrow and spend is justified (unless you are a traitor and vote to kill our troops). But the flip side of that things are ugly - but it is always the next guys problem.
With so much money readily available for investment, speculation was inevitable, particularly in the Tokyo Stock Exchange and the real estate market. The Nikkei stock index hit its all-time high on December 29, 1989, when it reached an intra-day high of 38,957.44 before closing at 38,915.87. (sounds familiar perhaps?)
The 1990s in Japan was the beginning of economic turmoil and recession for that particular nation; resulting in their Lost Decade.
I believe it. By “transitory”, he doesn’t mean “heading back to 2019 prices”. He means, “no longer inflating at these rates”. Thats almost certainly true.
The “Making Sense” podcast [0] covers the deflation / inflation debate in detail and is a great listen.
> Lee said when it comes to new home construction, pricing is being complicated by ongoing pandemic-related supply chain challenges. While difficulties related to lumber have eased, home builders are still dealing with delivery delays and price inflation on everything from plumbing and electrical products to kitchen cabinetry.
> "It doesn't compare to the three to five times price increases we saw with lumber, but I'd say on average, we're seeing 10 per cent increases on everything, including the kitchen sink," Lee said. "And we are still seeing delays on closings, just because of an inability to get products and materials."
Meanwhile... August 27th, 2021:
> "...households, businesses and market participants also believe that current high inflation readings are likely to prove transitory," Powell said.
https://www.reuters.com/business/why-fed-chair-powell-still-...
Sigh.
Nobody believes that, Jerome. Nobody really believes that.