I just got back from running some errands (dry cleaning, haircut, a little shopping), and while everyone says inflation is under control, it just SEEMS like everything is more expensive.
I get my hair cut at the same place I did ten years ago, and in that time, the price of a hair cut has gone from eight dollars to $15.
I just spent the most I have ever spent on a pair of shoes ($150.00 for Florsheim’s that are wide enough for my damned Fred Flintstone feet), and I remember similar shoes on sale for 70 bucks a few years back.
Gas is almost double what it was just several years ago. Milk is 3 bucks a gallon. The bottle of J. Vidal Fleury 2003 Cotes-du-Rhone I just picked up was $12.99. Ok. That is a bad example, because that is a good price and it is worth every damned penny
And it goes on and one like that. it just seems like contrary what I hear, things seem more expensive and you just get less for a dollar. Am I wrong about this?
rilkefan
Ok, you like CdR, you’re not completely evil.
Ancient Purple
You are not imagining it, John.
I track the economy by the “Plum Pudding Test.” I know it is not scientific and completely anecdotal, but here it is:
Every year, I make a traditional English Plum Pudding (yes, just like in A Christmas Carol, sans the ghosts). I have been doing this for years. The main ingredients are:
Candied orange peel
Candied lemon peel
Candied Citron
Candied Cherries (both red and green)
Currants
Raisins
Dates
Brandy
Flour/spices/shortening
Last year, the cost for me to make a batch was $34.79 plus $8.99 for a bottle of Hiram Walker Apricot Brandy.
This year, the cost for me to make a batch was $47.63 plus $10.99 for a bottle of Hiram Walker Apricot Brandy.
Ouch. All of the amounts were exactly the same and I kept the receipt from last year to compare with this year. Oddly, the things that were on sale last year (raisins and dates) were also on sale this year, so the comparison is very valid.
$43.78 in 2004
$58.62 in 2005
I am glad inflation is under control.
Andrew J. Lazarus
Partly you’re right. But don’t forget that tech items have become much cheaper. There’s a certain averaging going on here.
I used to work over a shoe repair store that also sold a few shoes. Every few weeks I would walk in, and look around. One day I got an unexpected bonus, and it must have showed on my face as I went into the shoe store because the owner (undoubtedly the only African-American entrepreneur in Orinda, California) said to me, “Going to buy some Aldens?” And I did; I ordered my first pair of $250 shoes. A week later they came and I tried them on. I was heartbroken. They were so much more comfortable than Florsheim and other second-rate dress shoes I knew I could never order the cheaper ones again. They’re $350 now, and I haven’t had a big enough bonus in a long, long time.
Sojourner
Paul Krugman has been making this argument for some time. Although the Bushies like to claim that the economy is going gangbusters, the reality is that most people’s salaries are not keeping up with inflation. It’s difficult to celebrate a strong economy when one’s paycheck doesn’t go as far as it used to.
O.F. Jay
John I’ll have to go with Andrew. I may not have the numbers but some things have inflated more than others. Electronics has gone down, which is probably the only thing that has gone down these days, and value for money out of the even newer, more expensive toys has gone up. Clothing has basically stayed the same at least according to my “preppy clothes” test, which is a new outfit for me from my favorite store every year.
However, food and transport have gone up.
Ancient Purple
I know!
Let’s give the wealthiest 1% of Americans a huge tax break and then we will all see our paychecks go further.
Problem solved.
(Disclaimer: sarcasm.)
DougJ
Glad you’re drinking Cote du Rhones now. That shiraz stuff you used to love is just grape juice with alcohol. Cote du Rhone is real wine.
The Disenfranchised Voter
Electronics always appear to go down because of the sliding obsolete factor.
The new computer that comes out today isn’t going to be worth the same come a year’s time.
But the state of the art computer next year will be just as expensive as the state of the art one now, if not more expensive.
capelza
Electronics are cheaper, but I don’t buy them every week like I do milk, bread, etc. Beef is way up.
Heating the house, filling up the vehicles, feeding and clothing the family..the basic stuff that we can’t live without are way up in the last five years (not saying this is this admin’s fault, though my little Dem heart would love to, but honestly can’t say it wouldn’t have happened in any other).
But hey, if one can get a “blackberry” cheaper, everything is dandy, huh? (what the hell is a blackberry? she asks head held in shame.)
Andrew J. Lazarus
Beef may be way up, fish is WAY up, but tofu is down. :-)
Edmund Dantes
For kicks and giggles John, why don’t you go look at the items they exclude from the inflation index that is the one always quoted to say inflation is under control.
TM Lutas
There’s both a general inflation rate and a personal one and it’s possible for them to diverge in opposite directions. If your tastes run to electronic goodies, your view of inflation is likely to be skewed optimistically compared to luddites who never partake of the fruits of the most deflationary portion of our economy.
Coincidentally (or not?) electronics seem to be the “in” gift for Christmas. I expect that tastes will adjust towards the more deflationary portions of the economy, somewhat easing demand pull inflation on the rest of the economy.
ppGaz
No, you are not wrong. You are exactly right.
John S.
You are 100% correct.
While I am glad that my home has doubled in value over the last two years, I am still reminded that the same money I spent then would only buy me half a house today.
From Business Week:
Which results in this scenario:
This is only the beginning. Things are going to get worse.
Jim Treacher
Also, these kids and their hippity-hoppity noise!
ppGaz
Phoenix is undergoing the same pricing situation. My neighbor’s house appraised for about twice what it would have sold for four years ago. Some houses in my neighborhood have gone up in asking price some 30% in the last year.
Meanwhile, my grocery bills since 2001 have gone up right around a third, and would be higher except that I have cut way down on beef for diet reasons. Beef, out here in the wild west where, you know, we have beef on the hoof … is so expensive, I don’t see how anyone affords it. Yet the supermarket has a meat case 25 feet long packed with beef cuts and seems to sell a lot of it.
The local utility has asked for a 20% hike in electric rates. My property taxes are way up. I am paying $600 a year in automobile registration fees. No, I do not drive a BMW or a Lexus. A package of coffee pods for my pod coffee maker is $5.35. It was $3.99 a year ago. Cheerios are $3.49 when they are on SALE.
So I switched my phone service to Cox from the old MaBell spinoff (QWest) to save about $20 a month.
John Redworth
How dare you, Mr. Cole! How dare you question our economy! It is currently running better than almost any time during the past 20 years.
Gas prices are going down and with gas being only $1.90 or so a gallon, you can make those long drives for no reason just like you used to do. Remember the prices after Katrina? So you know as well as I do that $1.90 is a bargain!
Food prices have only gone up just a little bit. With hamburger just $3.99 lb and chicken at $3.38 lb, I see no reason to question these low prices. Milk at $3 a gallon? In some third world countries, they would stab their mother in the face for such a price.
Haircuts are not necessary. So that $15 of expendable income you are spending is your own fault.
Your extra wide shoes for $150 is your own fault for having fat feet.
Our economy is running smoothly. Unemployment is down since there are so many jobs in the service sector open and wages are up (albeit not as high as inflation). After spending the past 6 months unemployed, let me tell you that people were banging on my door to hire me… that is how good the economy is… I easily could have had a job selling insurance, finacial planning, licking envelopes, data harvesting, selling things on eBay and so on… but since the job market was so good, I decided to wait until I found a job with a future… that is how good our economy is, my friend…
So quit complaining about the national debt or the tax cuts that favor the wealthy… just enjoy the fact that in our country of plenty, we have so many things to choose from… and that is the reason you are spending a little bit more than in the past…
RSA
Not in the things you mention. In an inflation-adjusted chart for gasoline, you can see that it’s climbed a lot in the past few years, even if on a longer historical time scale it’s still reasonable (and compared with most of the rest of the world, dirt cheap.) Your eight dollar haircut in 1995 should cost 9.95 today, at least according to one inflation calculator.
For me, though, it’s easy to get fooled by small incremental annual increases. I look back at what I was earning in my current job in 1996, when I started, and I think, “Wow, my salary has gone way up!” But then when I compute what the difference is in terms of an average annual raise, it’s only a few percentage points, no more than the inflation rate. And I’m probably lucky in that.
jg
And kids today just drive too damn fast. :)
Bob Munck
A billion years ago I helped write the Bureau of Labor Statistics software that computes the Consumer Price Index (in PL/1). As with polls, it all depends on the questions you ask. The CPI depends on what’s included in the basket of items, how their prices are determined, and how each item and category is weighed. The whole process is intensely political.
My own measure of inflation is the price of a paperback book and of dinner for two at the Inn at Little Washington — an hour’s income for a poor person and a rich person; the former is up to the $7.00 range and the latter to $600. It’s good to know the rich are getting soaked as much or more than the poor, but of course they don’t care.
Ezra Klein
When I was young, comic books cost a quarter and a hooker was only a dime.
CaseyL
It’s very complicated.
One, I have a real gripe with the Core Inflation Index omitting energy and food costs. That’s completely insane, because energy and food are not optional items. People have to buy both, and buy them frequently. The excuse I hear is that energy and food prices are “too volatile.” Well, excuse the fuck out of me, but it seems to me that volatility is an important real-world factor in the economy; maybe economists should start factoring it in, not out.
Excluding energy and food prices to “avoid volatility” is like excluding people with incomes under the poverty line when you’re calculating how well the economy is doing…. oh, wait. They do that too, don’t they?
Two, I’ve noticed certain items and services hike their prices but camoflouge the hike by adding new options – options you really don’t want, but can’t opt out of.
Cable TV comes immediately to mind: my Comcast bill went from $25/month to $65/month by virtue of adding such “improvements” as digital signal, TV on Demand, EZ Pay-per-View, and a bunch of “movie” channels that show the same old endlessly-rerun crap the parent company bought cheap. None of which I wanted or needed. (I had to threaten to cancel my cable service altogether before Comcast admitted it did have a bare-bones package for $13/month – but I don’t get the Comedy Channel or the SciFi channel.)
Software companies, esp. MS, do the same thing: end support for an app that was working just fine, thank you, and force you to buy an upgrade that has more bells and whistles which you did perfectly well without and which usually just kludge things up anyway.
Three, and on a related note, we’re encouraged to decide there are things we can’t do without, must have, that we really can do without and don’t need. Cell-phones with cameras and Web access come immediately to mind. iPods with video download are another (what, exactly, is the point of watching a TV show or movie on a 1.5″ screen??). Each time, consumers throw away gadgets that still work just fine and buy whole new gadgets – which will no doubt be obsoleted in 6-8 months, starting the whole cycle over again.
Add to that the fact that everything you buy jumps in price far more than the official rate of inflation, and more than your annual salary increase (assuming you get an annual increase at all) – and it becomes obvious that reports on prices and inflation are absolutely meaningless.
Bob In Pacifica
I wear black t-shirts and jeans, and buy cheap running shoes, so my wardrobe inflation meter has been running pretty flat. But that’s because all of those things are being made overseas now. I used to work where my union had an automatic inflation kicker. It seemed to have flattened the last three or four years. Didn’t the BushCo Labor Dept fiddle with the way that inflation is measured?
Before anyone starts saying, hey, union guy, why aren’t you buying American union-made, I can’t afford the gas to find any of those things American. New Balance sometimes, although they’ve moved a lot (maybe most) of their production to China, and John, they come in wide sizes, but t-shirts. Even Levis shut down their last American plant.
binky
So was that 12.99 at Slight Indulgence, Wine Rack or Wine Bungalow? Why not Guigal or Coupe Roses? ;)
DougJ
The Guigal is good, but I have had it too many times to enjoy it at this point.
I’m drinking a nice Sicilian wine right now. They’ve come a long way with the Nero d’avola. I’m drinking a nice right now called Pinocchio. I wouldn’t call it a great wine, but it has character.
You know what the best holiday wine — should I say Christmas wine to avoid the wrath of Fox News? — around is, though? That Cristallino Cava. It takes somewhat like decent champagne and only bucks. The best deal going for celebratory wines.
Krista
Ancient Purple –
Plum pudding – very nice! Yeah, I find baking supplies are more expensive too. (I just finished making Skor chocolate squares…yummy!)
binky
We’ve been drinking 1+1=3 cava lately, but it’s a little sweet for me. Can’t beat the price though.
Krista
We made our own Cabernet Sauvignon this year, and also a Vieux-Chateau-du-Roi (basically just like Chateauneuf-du-Pape). They’ve aged nicely, and when you amortize the cost per bottle…about $3. Can’t beat that with a stick. (Nor should you.)
Ancient Purple
Krista, Plum Pudding is a real treat. Everything thinks I am simply making my own version of fruitcake and then are absolutely amazed at what pops out of the pudding mold. A nice slice of pudding, drizzled with brandy or rum and then topped with a dollop of hard sauce. It is heaven. And I detest fruitcake with every fiber of my being. (Also, I love how the butchers at the local supermarker give me the once over when I ask for a pound of beef suet.)
As for your Skor squares, I WANT THAT RECIPE NOW! :o)
Ancient Purple
Oooops.
Everything should be Everyone.
Krista
Skor Toffee Chocolate Bars
3/4 cup hard margarine (softened)
3/4 cup packed brown sugar
1-1/2 cups all purpose flour
1 (300 ml) can sweetened condensed milk
2 tbsp hard margarine
1 (300 g) pkg. milk chocolate chocolate chips
1 (225g) pkg. Chipits Skor toffee bits
Cream first three ingredients until well blended and mixture comes together. Press evenly in 13×9 cake pan. Bake at 350 F for 20-25 minutes, or until light golden. Cool while preparing filling. Heat sweetened condensed milk and 2 tbsp. margarine in heavy saucepan, stirring constantly over medium heat for 5 – 10 minutes, or until thickened (*it won’t get very thick, so don’t fret). Spread over baked base. Bake 12-15 minutes longer, or until golden. Sprinkle milk chocolate chips evenly over top. Bake for about 30 -60 seconds, or until chocolate is shiny and soft. Don’t overbake, or they’ll dry out. Remove from oven. Spread chocolate evenly. Sprinkle Skor Toffee bits on top, pressing lightly into chocolate. Cool completely so that chocolate is set before cutting into bars. Store at room temperature.
They freeze wonderfully, and you’ll probably want to make two batches, ’cause they go really quickly!
Bruce Moomaw
Why, it’s enough to make one think that Krugman might know what he’s talking about. (What he’s been talking about in the last few days is the Administration’s declared bewilderment that the American public doesn’t appreciate how much the economy is improving. After all, unemployment is dropping slightly (albeit because wages are falling more rapidly), and the GDP is rising (although, according to their own most recent statistics, every bit of that increase — and more besides — is going to the wealthiest 1/3 of the public.)
But don’t worry: they’ll soon correct the public’s ignorance, by the simple technique (which they are now extending further) of withholding from the public still more of the economic statistics which the government has previously provided. After all, as Bismarck said, democracy means putting the children in chare of the nursery — and if we can’t trust warm-hearted nannies like Cheney and DeLay, who CAN we trust?
Ancient Purple
Krista,
OMG! Fantastic. I have copied that baby and will be making that soon. :)
Thanks!
Krista
No problem. They’re ridiculously delicious. My stepdad is watching his weight, and has been really good at cutting out sweets, but couldn’t resist these — he had 5 of them.
Bruce Moomaw
“(…albeit because wages are falling more rapidly)…”
Let me elaborate: wages for the vast majority of Americans, as compared to the inflation rate. That is, real wages for most people. The two groups who seem not to be vulnerable to this are (1) the rich, and (2) workers with strong unions. Plus ca change…
Horshu
Two things that I’ve noticed gone to hell in the last 5 years or so besides prices: customer service and in-store stock. I blame Bush.
Sine.Qua.Non
John…..everything is more expensive. When minimum wage and COL doesn’t keep up with the economy, everyone ends up with less money in their pockets……..except the top 1%.
BlogReeder
Aren’t the price of houses set by ordinary people? It’s like Ebay. I agree, house prices are getting out of hand. The price of things that John Cole mentioned are set by evil souless corporations, which should fall into a different category.
unkraut
Don’t cry to me about high prices if you can afford to spend $12.99 for a bottle of wine.
If, as you may respond, George Bush has driven you to drink, why not drown your sorrows in something like Thunderbird?
neil
The other day I was walking into the supermarket near my house here in Santiago, Chile, in a pensive mood, and I saw one of the many stray dogs that hangs around the parking lot sleeping in a doorway. I smiled and thought to myself ‘well, that’s the third world for you,’ and immediately realized the absurdity of the thought. After all, here I was about to walk into an air-conditioned chain grocery store with all the same sort of packaged, consistent-quality goods you find in American stores; I had gotten there in a car which I’d driven on well-maintained roads; in the same shopping center was a DVD rental store, and a KFC…
And I realized that for a middle-class person like myself, it’s true — in this ostensibly ‘third-world’ country, just about the only differences as far as material comforts go is that you have stray dogs in the grocery store, and everything costs half as much, or less. (Except gasoline, which is around $4 a gallon.)
And it makes me wonder — where is all that extra money going to in the States? Not to what people think it’s going to, I suspect.
Houstonboy
Very interesting commentary. I just skimmed, so I don’t know if someone mentioned the rising cost of transportation.
Getting the product to the point of sale is much higher than last year.
As for the “things are going to get much worse” mantra, I have heard it all in my years and things do get harder, but they don’t go depression. And things are rather good now.
The Dade county example is one area of the country that has been a hot spot for speculation. That is the key. Speculation.
Tell those Miami folks to come live in Houston or Dallas or even Midwestern-Northeastern towns where Real Estate are far more reasonable.
I’m still waiting for the Republican forced draft to send our boys to die for Israel and grab more oil and for GWB to declare himself His Excellency President for Life, Field Marshal and Supreme Commander Dr George W Bush, VC, DSO, MC, CBE, JD, DDS, PhD.
I won’t hold my breath.
chefrad
DC-area Chinese buffets went from $6.83 to $7.43 in the last month.
Whatever will the Dollar Stores (where John buys all his “Holiday” presents) do?
ats
Houstonboy Says:
“I’m still waiting for the Republican forced draft to send our boys to die for Israel”
Can’t be. I just heard Richard Perle say Israel was against the Irag war. That was right after he said (no kidding) the best journalist covering the Middle East was Judith Miller.
He closed by saying Bernard Lewis at Princeton knew more about Islam than any of the world’s 1.2b Muslims.
Richard Perle is a piece of work.
CaseyL
Neil – You boggle my mind. I’d heard that Santiago was a very expensive city. What are housing prices like there?
I’ve also heard Santiago is a hideously congested, crowded, polluted city, as it’s the only major metropolis in Chile and all business, legal work, etc., is done there. Is that true?
neil
CaseyL, Maybe it’s expensive compared to Lima or something. A house or large apartment can be rented for around $200 a month. I was walking around in Bellavista the other day, a popular nightspot close to the center of the city, and asked about prices of a few houses that had for-sale signs. The largestm an old 3-story mansion, was about $500,000; the cheapest (a one-story single-family place) was $20,000. There are more (and much, much less) expensive neighborhoods, but nothing compared to, say, California, or for that matter, Indiana. For a few other metrics, bread is around 20 cents a pound, beer is around a dollar a liter, a a meal at my favorite steakhouse is around $10 and the wine ranges from $10-20 (half as much at groceries). Wine is the national beverage.
The city is congested for more or less the reasons you described, although it still has room to grow outward in places. The pollution and congestion are mostly because of the fully private bus system — 5,000 drivers own their own buses, mostly old and diesel-burning, and all the routes go through the center of the city because that’s where the most passengers are. The city has just begun buying up the bus routes and dispatching a new fleet of new CNG buses, and will gradually create a more sensible network of feeder routes with transfers.
My perception is that across the class spectrum, the standard of living here is not so different from the U.S. The big difference is that the poorest people can’t afford as much consumer electronics, but they do have T.V.s and enough to eat, and they can buy medicine. Crime is more common, but not so much so as to make life fundamentally different.
BIRDZILLA
Its still $8:00 here where i live
Phillip J. Birmingham
I may have to set down this Sierra Nevada Celebration Ale (a reward to myself for plowing the driveway) and slap you for that remark.
Perry Como
Our economy is growing like gangbusters.
Aaron
Food prices can swing drastically and are affected by weather.
Also, maybe you now shop at an expensive whole foods store instead of Piggly Wiggly.
Halffasthero
Looks like all the points that I can make have already been made here.
OT
Why didn’t you post on the Steelers/Bears game? I was preparing to thank them for helping us out here in Minnesota. Of course thanks is only going to last as long as this Sunday when the Steelers and Vikings play. The Vikings actually have a defense now it seems and might actually be able to compete. It will be a war of the winning streaks. Correct me if I am wrong but the Vikings have a 7 game and the Steelers have a 6 game winning streak.
Predictions?
Phillip J. Birmingham
I’ve heard it has a great nose.
Krista
That was just wrong.
Marcos
But, but…the GDP is up and there’s more millionares now than ever. Check out our low low taxes! Every government social program must go! We’re INSANE!
circlethewagons
Did I just wander onto Andy Rooney’s blog?
BIRDZILLA
When i went ti HIGH SCHOOL back in the 70s it was 75 cents for a haircut but i BIRDZILLA just molt away
JoeTx
I’d like to thank the Republicans for cutting all those taxes for the rich during a time of elective war in Iraq. Nothing like spending money like a drunken sailor in port all the while decreasing revenues to pay for the war party to make our money worthless…
Here is a good read for you
When yellow Dogs Bark
TallDave
Sorry to burst everyone’s bubble, but the rich actually pay a larger share of taxes now than before Bush was elected, and a much larger share than 25 years ago.
http://taxprof.typepad.com/taxprof_blog/2005/04/wsj_on_distribu.html
And the top 5% still pay over half the income tax.
So when you’re whining that not enough of that “evil rich people” money is being forcibly seized by the gov’t and redistributed to you, try to remember that the whole process is technically an unconstitutional infringement on their rights anyway.