Inflation rises 7.5% over past year, more than expected and highest since 1982

Re:Inflation rises 7.5% over past year, more than expected a... by runako on Thursday February 10, 2022 @10:15AM (#30287245)

I think the point being made is that the portion of inflation caused by used car inflation is likely transient & due to a well-known cause (automakers shut factories due to Covid) that is being remedied. The question all along has been how much of inflation is due to obvious transitory effects like this one.

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Re:Inflation rises 7.5% over past year, more than expected a... by beerandt on Thursday February 10, 2022 @12:12PM (#30289281)

Vehicles are not only "behind" on supply (which is difficult enough to overcome in an industry that's so dialed in to production capacity that quick bumps in production aren't possible), but they continue to be produced at below normal capacity and so the shortage is increasing, not catching up.

The chip shortage is playing an outsized role here. Vehicles are being delivered with IOUs to come back in a year or two to have chips retrofitted in order to enable options listed on the window sticker. Everything from climate control and heated seats, to wireless phone charging, to autostop/gas saving measures, to lane keeping and collision avoidance. And delivery numbers are still extremely low.

Catching up means either years of bringing up total factory capacity to beyond pre-covid levels and catching up on the chip shortage... or a recession or other event that suppresses demand.

Transient in this sense only applies if we're taking about fractions of a decade, not fractions of a year.

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Re:Inflation rises 7.5% over past year, more than expected a... by runako on Thursday February 10, 2022 @12:30PM (#30289592)

> Transient in this sense only applies if we're taking about fractions of a decade, not fractions of a year.

I don't know the answer to this, but if the choice is either let inflation run hot like this for another couple of years or engineer a recession, is there a clear policy answer? The benefits of a hot economy seem to outweigh the downsides from the perspective of high employment, but perhaps not in other ways.

Just 2 years ago, the worry was whether we would end up in a deflationary spiral and have no real policy levers to exit. Given the lag time for any policy response to take effect, it seems really hard to get correct. I definitely don't envy anyone who's making policy decisions on this.

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