Our Experience with the Collapse of the Dollar’s Purchasing Power for Used Cars, Auto Insurance, Repair Costs, Rental Cars

Or why auto insurance has gotten so ridiculously expensive — after used vehicles have gotten so ridiculously expensive.

By Wolf Richter for WOLF STREET.

I’m going to lay out some crazy shocking numbers relating to used car prices, cost of repairs, insurance, and rental cars. This isn’t data, but it’s one incident that illustrates what we’ve discussed here for the past two years, the craziness of what has happened in terms of inflation – and just how far the purchasing power of the dollar has plunged with regards to used vehicles, repair costs, insurance, and rental cars.

And the most shocking part is that it isn’t even shocking anymore, it just makes you feel crappy, and we griped and grumbled, but paid, spending money like drunken sailors, as inflation has taken root in its insidious ways, thereby confirming what Powell had said, that consumers “hate inflation, hate it,” and that they’re in a foul mood, but keep spending.

Our 2018 Ford Fusion Hybrid, with 75,000 miles on the odometer, got rear-ended. My wife, who was driving it back from work, was not injured. The driver-side airbags deployed. The rear was fairly symmetrically crushed. And the front left corner, which got shoved into the vehicle in front, got bent up, and the headlight assembly was destroyed.

We had bought the vehicle from a rental car company in February 2020 with 35,000 miles on it for about $15,000, before used-vehicle prices began to spike in the craziest manner never before even thought possible.

The insurance adjuster looked at the vehicle for 10 minutes and totaled it – meaning that he estimated that it would cost at least 80% of the vehicle’s replacement cost to fix it. It was apparently such a clear-cut case that he didn’t even bother to have the vehicle taken to a body shop where the damaged panels could be removed to get a look at the damage underneath, check for damage of the suspension parts, etc.

Stunning item #1: The insurance company offered us nearly $18,000 for the vehicle that we’d bought for $15,000 three-and-a-half years and 40,000 miles earlier. Normally, that vehicle might have been worth $10,000. Obviously, this isn’t some kind of collector’s car that might gain value, but a run-of-the-mill former rental car; what changed is the purchasing power of the dollar that, with regards to used vehicles, has essentially collapsed over a three-year period.

Stunning item #2: Repair costs, so parts, labor, paint, and supplies. Even a less-than-exhaustive look by the adjuster determined that it would cost at least 80% of nearly $18,000 to fix the vehicle, so at least $14,000 in repair costs. If the suspension parts turned out to be damaged, it would cost more on top of that. No telling what the ultimate repair cost would have been.

So bye-bye. An auction company picked it up. It’s common that such vehicles are purchased to be exported to a cheap-labor country, often in Central Asia, to be repaired with cheap but highly skilled labor and cheap parts, and for this then creampuff to be sold for a nice price in one of the Gulf states or elsewhere in that part of the world. This is a big trade, and part of the dynamics behind the thriving used-vehicle exports.

Shocking item #3: The cost of the replacement vehicle. The $18,000 would have bought roughly what we had: a 2018 Ford Fusion Hybrid with about 75,000-ish miles on it. There were some for sale in that range.

But our sweet spot where we buy is 1-3 years old, with 25,000 to 35,000 miles on it. We found one in that range at a CarMax about 100 miles away, a 2020 Fusion SE Hybrid with 25,000 miles. It was originally a lease return that had been bought by another person and then traded in. The Carfax checked out, everything was fine. The price? Close to $23,000 before title, tax, and license fees, doc fees, etc. We moaned and groaned and bought it.

Shocking item #4: The price of the rental. We rented a compact car from Enterprise, for one week, and it was $519. That was more than double last time we’d rented a compact car from Enterprise, which was over Labor Day 2019 for a week from Salt Lake City.

Shocking item #5: Auto insurance premium, oh my. Our last two auto renewals – September 2022 and September 2023 – had been a shocker; and when we changed the vehicle to this vehicle, because it was a newer model, another lump was tacked onto the premium, with the effect that our insurance premium went up 50% over the two-year period. It’s not that this insurance has suddenly gotten so much better, but that the purchasing power of the dollar with regards to auto insurance has plunged over those two years.

One of the reasons why auto insurance has gotten so much more expensive is the effect I just described here: the collapse of the purchasing power of the dollar with regards to used vehicles and repair costs; instead of paying us about $10,000 for the old vehicle, the insurance company paid us about $18,000; and repair costs have skyrocketed for vehicles that the insurance company pays to have repaired.

Shocking item #6: we weren’t really shocked anymore and paid, having expected this, after having been confronted with this mess for a while, and having seen it work its way into everything. Inflation has taken root.

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  260 comments for “Our Experience with the Collapse of the Dollar’s Purchasing Power for Used Cars, Auto Insurance, Repair Costs, Rental Cars

  1. James Richard says:

    Question would be what a comparable non-hybrid vehicle would, including insurance, have cost. Over the estimated time, milage, potential repair cost that you would own said vehicle, what would the cost difference be. Not that you would have run these numbers, but I would be curious to know this before I had made a similar purchase.

    • Wolf Richter says:

      1. This article was about price increases of the “same” product and services over time (=inflation), not about trying to save money by substituting a cheaper product.

      2. “Substitution” is a factor that is included in the PCE price index and drives down the PCE price index (but it’s not included in the CPI). It’s a different topic and doesn’t belong in this topic here. One topic per article.

      3. You’re giving me advice on how to buy or what to buy. I’m the last person on earth who will listen to your advice about cars. Look at my bio, LOL

      5. FYI, we cut our fuel costs in half by buying it back in 2020, compared to the prior vehicle we had. At $5 -$6.20 a gallon, you do the math.

      • Steve says:

        FYI Carmax is on average $3-$4k over what the same vehicle can be had at a reputable private party like an older couple would have, they are among the highest priced dealers. Same with Carvana. But your point about inflation is on point. But now the update: nobody hardly is willing to pay the higher inflated prices anymore, nor can they. My business has completely died. Nothing. And I have vehicles at $3-$5k+ LESS than what Carvana or Carmax would sell them for. People have run out of money and are not buying vehicles. If dealers sell at cost or loss there will be some buyers. There are exceptions with high demand vehicles like Prius and those dealers but that is more isolated as a whole. Look for many small dealers to start folding, their operating costs from inflation are unsustainable now. Good deals will be around in the future, probably sometime next year. If anyone has any money left then for them then is questionable.

        • CCCB says:

          Welcome to 2023

        • Wolf Richter says:


          1. If CarMax is so expensive and you’re so cheap, why is CarMax doing OK, and your business “has completely died”? Why are they selling a gazillion vehicles, and your sales are dead?

          2. There were only two 2020 Ford Fusion Hybrids with 25-30k miles out there within the Bay Area. The other one was at a Subaru Dealer 100 miles away. I was going to take a look at it, but the salesman said that it would be a few days before I could look at it because it was stuck in their prep department. 10 days later, when he called me back, we’d already bought the only other one.

          3. You need to do some navel-gazing about your business, Steve.

          The 2021 and 2022 were HUGE record years for used vehicle dealers with record sales and profit margins. Now prices, revenues, and profits are coming down from those super-high levels last year, but they’re still very high: CarMax made a net profit of $118 million last quarter. So that’s not the end of the world.

          You’re dissing a very successful and profitable used vehicle dealer, and your own business is in shambles. You might want to look at what CarMax is doing right, instead of dissing them.

        • Steve says:

          Reply to Wolfs after comment:
          1) Unlikely Carmax doing ok now. But they sell newer cars with $4-$7k profit margins. All FINANCED. People going deeper in debt, not good right now. I sell high quality, low mile highly desirable work trucks Vans and SUV’s age 12-20 years old that have 10-15 years life left, very hard to come by, all prior Government owned. These vehicles are usually NOT financeable. My prices are $8-$12k range, a range with around $2-$3k profit max. I am the small dealer, the ones many people need and can afford and there are many all over. Its been good except for 2008-2012, and now 2023. 2021-2022 had record profits but thats all OVER. The cash buyers are gone again. Carmax/Carvana got out of slighter older vehicles around the pandemic and survive on nosebleed rip profit margins now and financing only. A rip which I will not do. People need help and I fill that need.

          2)Your market of SF is a rip for everything, imho, and always has been. The rich there never care so sellers fleece them. You can get much better prices if you can go to So Cal.

          3) I am the lowest priced dealer of my quality inventory. Every other small dealer of vehicles older than 10 years and there are may like me will have it harder than me, because of no financing and higher prices. Or if there is financing they are denied. The cash buyer is wiped now. Even the flippers are not buying. My business is not in shambles as much as the low and middle classes, who are the small dealers’ main customer. What would they buy, a $30-$40 used truck or a $10k one with the same miles that will last the same years maybe with less problems. Many many people are used to buying $3500 to $5000 decent trucks. They dont exist anymore I cant help them. I used to sell those. This inflation is killing things from the bottom up. There is a rolling crash from unsustainable inflation and it wont abate until a crash goes full circle imho. You say there is no recession because of charts. I say then the charts have fraud in them and one needs to look on the ground to find reality outside of bubble areas to see reality. I will retire before I rip people. I will not compromise. Honor over profit. But thats just how I roll, old school.

        • sufferinsucatash says:

          Also, I had heard one can negotiate the price of used cars down alot. Is this correct? Or was this a pre pandemic thing?

        • Wolf Richter says:


          Depends. At lots of dealers you can negotiate the price. And you’ll be fighting them over the add-ons that weren’t part of the advertised price, the fluff-and-puffs and the extra whatever electronic thingamajigs, etc. Some of those yes-haggle dealers make used vehicle buying very unpleasant and full of surprises. I’ve walked out of a bunch of those.

          But the big auto chains, such as CarMax, Auto Nation, and some others use no-haggle take-it-or-leave-it prices. And the advertised price is then actually on the paperwork, plus maybe a $90 doc fee if they do all the work with the DMV for you.

        • tom20 says:

          Thanks Steve

          Your follow up nails it.
          Hard to see from the charts.

        • HS86 says:

          Steven. Thanks for taking the time to bring light to your case, and Kudos to your business practice beyond the results driven model. Perhaps its all because of advertisement, perhaps its because people gravitate towards big nameplates and nationwide brands, perhaps because people don’t look at an honest work truck the same way they used to anymore, they want either a hybrid or a Range Rover. But you convinced me that there are better products out there that people don’t buy, because they’re simply herds.

        • NBay says:

          Wonder if in that Range Rover backing up (to dump a body or something ?!?) off the cliff commercial, as the beeping and bar display goes solid the driver lets it auto brake, or has his foot glued on it the whole time and really hits it hard?

          I know the real life commercial filming truth, but what is in the head of an idiot watching who buys a Range Rover, the target audience?

          Had a pretty high up (very chubby) guy at Oracle buy the real nice 2 br cabin below me for his almost 20 year younger slender trophy wife who wanted to spend weekends in the country. (she later dumped him and lived there with musician BF), and a pile of cash I imagine, for a couple years.

          Anyway he was trying to drive his new white Range Rover up a sloppy summer only road and had to back down and was somehow (probably him just trying over and over) slid over and almost high centered in a deeper part of the ditch at the main road. I stopped to help, and he kept saying, “I HAD it in 4 wheel low!” THAT type?

      • bill says:

        I see.

        Wolf lives in San Francisco. But it was in Texas and Oklahoma where he went to high school, college (Midwestern State), and grad school (MA at Tulsa University, MBA at UT at Austin), and where he worked for many years, including a decade as General Manager and C.O.O. of a large Ford dealership and its subsidiaries.

        I still drive my one owner 1977 Chevrolet Nova Concours Coupe, 2-Door, now with a new 305, two barrel. I was hit straight into the side, missing the rear wheel. Repair required an older bodyman familiar with the heavy iron in the Chevy. This car also has a pair of absorbers on each bumper.

        • TimTN says:

          Today I learned this! I was wondering :-)

        • phillip jeffreys says:

          Wait til you see what the charges are for dents/damage to EV frames!

          I’ll concede I’m working with anecdotal data – but holy smokes just the same.

        • ApartmentInvestor says:

          I have heard it is crazy expensive to fix a Tesla after just a minor bump but I just read that a Rivan electric truck owner got a bid of $42K to repair a minor bump (Google Rivan cost to repair, the story got a lot of press).

        • NBay says:


          Is that the BEST anti-EV message you are capable of getting in??!!

          If I were your troll farm boss I’d fire ya…….NOW.

  2. Cold in the Midwest says:

    Sobering report Wolf. Yet another example of how we are living in a counterintuitive economy. Well illustrated by your comment of “thereby confirming what Powell had said, that consumers “hate inflation, hate it” and that they’re in a foul mood but keep spending.”

    Possibly the “better buy it today because it will be more expensive tomorrow” mindset has become ingrained after the inflation levels of the past few years. Regardless of the Fed’s comments and rate hikes.

    Search on the keywords “effects of interest rate hikes” and one item from the results is that these hikes “reduce spending and consumer demand.” Ah, no. Not this time around. Another result from that same search states that rate hikes “cause consumers to spend less.” Again, no. At least not yet. Yet another example of a result that was probably expected by the Fed but has failed to materialize.

    The Fed is now walking a tightrope between recession and decreased inflation. Will they make it to the soft landing at the end of the rope? Hard to say.

    • SpencerG says:

      I don’t think the Fed is too worried about a recession… if it happens it happens. Priority 1 for them is getting inflation under control. Priority 2 is reducing their balance sheet back to something resembling normal times (QT).

      • Arnold says:

        We are in day 437 of recession watch here at Wolfstreet.

        • Mia Simmons says:

          It’s pretty clear that if they really want to crush inflation they have to crush the economy and the speculative markets, which sadly now includes housing. The only thing that matters for the Feds is government debt markets, and that has been wobbling. So, inflation for longerer, or depression?

        • Cas127 says:

          ” (crush) the speculative markets, which sadly now includes housing.”

          Agree 100%, Mia.

          DC decided at least 20 years ago that it was right (and that DC had the right) to convert people’s housing into yet another dubious “policy lever” to further/fix its own dubious policy agenda.

          Scared crapless to try and tax in order to fund wars or “reboot” the economy? Money printing/ZIRP let’s you be a snake about it – DC did want it wanted and in its grand tradition, kicked the can and lied about the costs/consequences (turning the housing mkt into an interest-rate futures casino).

          Now the bills are due and that ‘ebil internet makes it so much harder to lie to people.

        • Candyman says:

          No we are not!!! Please read Wolf’s articles. Drunken sailors!

      • Miller says:

        Especially QT. The short term rate hikes have been important, but QT is the main tell to affect the longer term yields and pop the housing bubble. Especially as the Fed rolls off the MBS’s should never have been purchased in the first place.

      • sufferinsucatash says:

        They could… DO IT ALOT FASTER!!… lol

        • Cas127 says:

          Yep, if you want “shock and awe” there has gotta be shock…and arggh!!!.

          I get Wolf’s point about flatlining the economy, but the truth is that if all you have created is a Frankenstein-like mockery of a real economy (pandemic housing booms!! NFTs of Bernanke’s big brass b*lls!! Hundreds of billions in “stimulus” theft!! More hundreds of billions in VC investments brought to you by the Underpants Gnomes Guild…and CALPERs) “flatlining” is baked into the cake from the get go.

          The whole shooting match was a walking abortion from Day One. Why should anyone be surprised if it ends in a ruinous collapse? People have been screaming about variations of this nightmare for over 50 years.

          All 20 yrs of ZIRP bought was a Zombie Economy (looked alive, but was all the more surely dead).

          The desperate leverage-fuelled speculators look at DC all they see is a more grossly engorged, more deeply perverted version of themselves (national debt – so far – $32 trillion) – that is why they are willing to play chicken with rising rates.

    • Miller says:

      yeah it can be tricky to measure effects of inflation on spending esp for essentials, partially due to effects you mention. Not any doubt that consumers hate it, but for actual essential goods (and cars are essential in parts of the country) what choice do they have? If graduating and start a job in a new city without good public transport, or if their current car breaks down then they’re stuck in a market when even used car prices can be budget busting. So nominal dollar spending can still be up even if total sales are down

    • John H. says:

      Cold in Midwest-

      You said “ Search on the keywords “effects of interest rate hikes” and one item from the results is that these hikes “reduce spending and consumer demand.” Ah, no. “

      At some point, austerity will kick in as a consumer reaction. (If we’re fortunate, maybe even as a new-fangled fiscal direction!). The period of austerity will be very painful…

      • joedidee says:

        my insurance went down $59 when I sold 2015 F-150($30k truck)
        and put on 2003 f-150 POS

        virtually NO CHANGE in premium

        • andy says:

          Most of the premium is liability of you driving, not your truck.

        • andy says:

          In fact, you should be glad they did not raise your premiuim $59 for driving less-safe truck. Does it even have ABS?

        • joe2 says:

          I got rid of comprehensive and my insurance still went up.

          Now required liability only. Good new is my property tax is only $35. Funny I saw an auction on YouTube where my same 20YO 4Runner with 50K more miles sold for $5K.

          I figure $3-4k more per year just for insurance and tax on a new one.

    • RH says:

      The “asset” class, being laughably generous with the term (LOL), that will collapse the most (and might, like tulips, cease to have significant value) as interest rates rise and investors have more options, is crypto crap. I am amazed that quantum computers are progressing nicely, and can crack any encryption once advanced enough, but crypto bros are saying that is nice, like the captain of the Titanic might have marvelled at the beautiful iceberg, before his ship hit it. LOL. Good luck getting back your crypto crap from some foreign hacking fraudsters once your crypto wallet or your crypto exchange gets hacked. LOL Fear will then cause crypto crap “investors” to sell in a tidal wave, after the first major hack.

  3. Doctor_ECE_Prof says:

    Wolf, I said this and still say, anything made or serviced by Americans would cost am arm and more. The so called offshoring is going to exasperate this situation. Think about making a doctor out of our own kids (yes, I did with 2 kids) and the cost from birth to degree Vs importing a foreign trained doctor, just to give an example. We have been subsidised by foreigners due to a number of reasons (petrodollar, ex) and that advantage is slowly disappearing. Think what is happening in UK, where the sun was never supposed to set?

    • Arnold says:

      Universities in some countries are very affordable ( and sometimes even free ).

      • JimBob says:

        Nothing is free. Go to one of those countries and pay 80% tax rate. Even if you don’t go to college you’re paying for everyone else.

        • Arnold says:


        • HowNow says:

          JimBob, you’re rationalizing.

        • Whitten says:

          JimBob… 80%? I went to university in Canada in the 2010’s and paid $25k all in not including a bunch of scholarships I qualified for and I paid less tax than I did in NYC. I capped out at 40% tax in Alberta in the highest tax bracket, and I am at about the same in the US. People really talk a lot of crap without knowing anything.

        • Sams says:

          Well, but quite often the doctors service is then quite affordable to those without a college degree;)

  4. SpencerG says:

    “There are eight million stories in the naked city. This has been one of them.”

    Good rundown Wolf. The parts of your story that I am experiencing are the price increases on auto insurance… 20% spike two months ago on a 22 year old SUV with no claims history… AND the rental car experience. I went to my college reunion last weekend and it was actually cheaper to Uber around all weekend (50 miles from the airport) than to rent a car… a LOT cheaper.

    • kam says:

      “Price Discovery” is dead.
      Inflation begins with stealth, then slowly suffocates reason.
      I buy lots of stuff for business, and there is no logic, just push prices until the customer pukes.
      Inflation destroys economies in many ways, but when supply/demand is measured in rubber dollars, productivity/value creation, is lost in confusion.

    • ApartmentInvestor says:

      SpencerG wrote:

      > I went to my college reunion last weekend and it was actually
      > cheaper to Uber around all weekend (50 miles from the airport)
      > than to rent a car… a LOT cheaper.

      I rarely rent cars anymore since UBER/Lyft is not only cheaper but avoids having to deal with picking up and dropping off a rental car.

    • ChangeMachine says:

      “You will own nothing and be happy.”

  5. BackRoad says:

    The inflation is a lot more than official. It is shocking how expensive it has become to live in the USA. I live in rural New England, and difficult these days to get a burger + beer and get out of there for less than $30 with tip and taxes. When did $17 for a burger or sandwich become the standard???

    But the restaurants are full. People are paying these prices. Rents, house prices, restaurants, paying to get house fixed, etc…has just become so terribly expensive.

    I’m starting to push back and going out to restaurants less. I do it more as a social thing to get together with friends (can eat at home vastly cheaper). It’s just gotten to the point where I do not want to support getting gouged and really the quality and service is not great either these days. Especially for the price you pay.

    The people who are getting really killed by inflation are fixed income early retirees and retirees. Espeically if they rent. Especially if they are waiting until 70 to collect social security (at least that is pegged to CPI).

    People in the work force in unions, UPS ($170k drivers), gov’t jobs, Amtrak ($121k ave pay) – are at least getting wage hikes. Retirees or self-employed folks are getting killed with inflation.

    • Pavel says:

      Fortunately I don’t drive so the auto inflation doesn’t affect me directly (though it does vicariously, of course).

      As for restaurants, I agree completely. Thankfully I live mostly in Europe where the tipping madness of the US and Canada hasn’t taken hold. But I visit the States frequently and a $30 meal becomes $40 or more after taxes and tips. In NYC at nice but not exceptional restaurants a dinner for two with drinks is at least $150. And frequently the service is minimal to say the least.

      Better to buy high-quality ingredients and cook at home, and support local farmers if you can. Much healthier!

      • HotTub says:

        So quit tipping Pavel. And if the servers don’t like it, tough… get some skills and find a better job.

        • Julie says:

          You sound nice.

          If you can’t afford the tip don’t go to a restaurant–or move to Europe. How bout that?

        • Pea Sea says:

          If you can’t afford to tip, get some skills and find a better job.

        • Robert M. says:

          My advice to food servers and all types of service people everywhere, including professionals–doctors, lawyers, accountants . . . “Stop serving HotTub.”

        • Cookdoggie says:

          Fox News begins a new segment, the War on Tipping.

      • jon says:

        I absolutely hate eating out and it works for me.
        I prefer eating simple home made meals than eating out.

        BTW, my auto insurance has increased 70% in last 3 years. I did shop around.

      • andy says:

        Yes, but can you cook?

      • andy says:

        It is also better to fix your German car yourself. Saved thousands of dollars this way.

      • josap says:

        We used to go out to lunch once a week. Now we go out to dinner maybe once every two months.

        Prices are much higher, food is lower quality, service is minimal at best. It just isn’t the experience or enjoyment it used to be.

        Both Hubby and I are good cooks.

      • phillip jeffreys says:

        It’s NYC! Who cares? Speaking of farming – reap what they sow.

    • jon says:

      n the last 3 years, I got hike of 15% on my salary.
      The cumulative inflation in last 3 years must be at-least 60%.
      The govt metrics about inflation is all manipulated.

    • Consuela Jamies says:

      Inflation too high? Can’t afford your lifestyle? Credit cards maxxed out? Governments hate this one trick: Stop Having Kids! You cannot afford them anyway, and at this point you are condemning them to a life of misery, far worse off than yourself or your parents. Then Ponzi off. /s?

  6. TomS says:

    Translation: What’s needed is a good old fashioned, serious recession.

    It’s the ONLY thing that’s going to restore some level of price sanity.

    My friend got his roof replaced due to “hail” damage. I know exactly how much the materials cost or about $5,500. His insurance company paid $26K to replace the roof. His deductible was only $2,500, so he didn’t care.

    But, he should care. Crimes like this make insurance go up drastically.

    • Julian says:

      *What’s needed is a good old fashioned, serious recession.*

      I think this recession is expected by all the governments and central banks of the world to start the wild money printing again.

      To be honest, I don’t know what’s better, a good recession or persistently high inflation and interest rates

      • billytrip says:

        Yeah, we need a recession WITHOUT the “wild money printing”. I am hoping that the Fed has learned its lesson about attempting to repeal the business cycle.

        • Z33 says:

          Well, CME FedWatch Tool guessing no rate hikes in the next 2 meetings. We’re not in a recession and Govt running $2T annual deficit. So I’d imagine in a recession rates will be 0% and deficit $4T+. Fed cares about rate of change of prices, not actual price levels. So if prices shoot up 30% in a year, but if it is up “only” 2% the following year, it’s ok.

      • DV says:

        Governments cannot afford deflation , which results from a decent recession. So they will keep telling people that they are fighting inflation, but will keep pumping up money supply.

    • andy says:

      So you knew exactly how much materials cost, but insurance company was in the dark? Is strength of materials part of Magical Monetary Theory curriculum ?

    • sufferinsucatash says:

      His roof must have been pretty new. Usually the insurance company uses the life of the roof to figure out the value of the payout.

      So say your roof is 25 years old and you make a claim, well they aren’t giving you very much.

    • Mitry says:

      Insurance companies use a software called Xactimate to estimate the amount they’ll pay out for a roof (and other storm damage). What’s criminal is that $26k/roof amounts to a lower middle-class existence for most roofers.

      • HowNow says:

        And his insurance premium will go up substantially in the following umpteen years, until the insurance company recoops the payout. Then, they’ll continue with that or higher premia.

        • Mitry says:

          The insurance company will recoup the cost from the pool of insured, not him personally. It’s a win for him. Try to remember he also got a new roof. Cost/benefit.

  7. Kent says:

    Wolf, I’d be interested in your thoughts on why this has hit the auto industry so hard. I think we were all brought up to believe that competitors had to work hard to produce and cut prices to gain market share and profits. One would think that the manufacturing and supply chain issues would have worked themselves out by now, so the industry should have returned to some level of normalcy. Maybe this would be a post by itself.

    I’m not saying inflation isn’t somewhat entrenched, but it seems to be especially virulent in the auto industry and rent. Most Americans two largest expenditures.

    • Wolf Richter says:

      This is one of the big mysteries about inflation. Most people (except those whose cars get ruined in accidents) can just keep driving what they have for a year or two or longer, and the first price increases would have caused sales to collapse, dealers would have been overstocked, and with sales plunging, prices would have gone back down. It would have been the end of the story. But during the pandemic, people wanted to change vehicles and were willing to pay whatever. It was astonishing to watch, and I shared my astonishment at the time. This should have never ever happened. It made no economic sense. Cars are not like food – since most people can just wait a month or a year when prices go crazy. But they didn’t. Something had broken, and the inflationary mindset has kicked off.

      • jon says:

        Cars are not like food but it is still a necessity when needed.
        A point in case is: “Close to $23,000 before title, tax, and license fees, doc fees, etc. We moaned and groaned and bought it.”

        You were forced to buy. I was in the same board few months back and I was forced to buy.

        @WR: OTOH, I am curious about your opinion on coming CPI report ? Would it go higher ?

        • Pea Sea says:

          Yes, that’s what he said. Those who need to buy, by definition, need to buy. But those forced buyers are a tiny minority. During the pandemic, people who did not need to buy bought anyway and paid whatever (just as they did with houses and everything else).

        • Wolf Richter says:

          Yes, we were forced buyers. As I mentioned, people whose vehicles get destroyed turn into forced buyers. But that is a small percentage of all buyers. Where do you think all the trade-ins come from? People buying their first car are forced buyers in many cases. But that’s a small percentage too. So if those remain in the market, and all others go on buyers’ strike, sales volume collapses by something like 80% — and that would kick off an instant price war, and inflation would be dead.

          I expect for overall YOY CPI to tick up for the rest of the year. But CPI can through you a bunch of curveballs.

    • Tom V. says:

      Basically, people with wealth and/or income buy most of the new vehicles sold. Over 90% of new vehicle purchasers own their home. Roughly 5 to 6 percent of the adult population buys a new car each year (2020 – 14.6 million new vehicles sold, or 5.6% of the adult population, 2021-15.1 million new vehicles sold, or 5.8% of the US adult population. 2022 -13.75 million new vehicles sold, or 5.3% of the US population).

      So when they want a new car, they get it, and when demand outstrips supply, prices go up. These rising prices drove some people out of the new vehicle market and into the used market. At the same time, lack of turnover of rental fleets (see: new vehicle supply constraints) exacerbated used vehicle supply, and used vehicle prices also soared.

      Today, rental fleets are finally starting to turn over, which adds supply to the used vehicle market, but adds pressure to the demand side of the new vehicle marketplace. A lack of off-lease vehicles also hurts the ongoing supply side of used vehicles. Both new and used gross margins are beginning to ebb somewhat, but it’s going to take some time before the markets come back into balance.

      Prior to COVID, it was a race to the bottom mentality for the auto makers who were running their plants at full-capacity and either jamming inventory onto their dealers or onto rental operators. I have no doubt that, over time, they will revert to their old ways. In the meantime, prices remain sticky and high.

      • sufferinsucatash says:

        New car prices really have not gone up that much WHEN you compare them to used car prices.

        Actually a new car MIGHT be the smartest bet. But I dunno atm.

        I just hate repair bills, repair time and being stranded on a dangerous highway.

    • JimK says:

      I believe it is virulent because dealers can charge what the market will bear, and sometimes that is a crazy premium over MSRP (when demand exceeds supply, and especially when customers fight over inventory due to extreme scarcity). Other times, it is a crazy discount under MSRP, (when supply exceeds demand, and when customers do their internet due diligence in order to make sane decisions). The roller coaster began when supply got decimated during Covid, but demand did not decrease enough to balance price action. Many/most other, usually less expensive goods and services have a more stable pricing mechanism, tied somewhat to cost of production plus reasonable margin, with less speculation than autos.

  8. Natron says:

    After driving my used car for 40k miles and apparently breaking even on it’s current price from the purchase, my insurance went up 30% over the last year and that’s with just liability on it, figuring the costs for collision coverage wouldn’t be worth it.

    I did shop around on that front tho and found one that reduced the insurance by nearly 50% switching from “SF” to “A”. Was surprised that was possible. Will see if it was a bait n switch next year…

    • Flashman says:

      But they all advertise they can save you up to 20 percent if you bundle house and car and switch to their insurance company. Maybe we have to switch every year.

    • ru82 says:

      So many things are going up in price.

      i have a Home Association fees jumped from 300 to 500 this year. That is 40%.

      I am sure insurance will go up. My $1 large coke at McDonalds a couple of years ago is $1.39 now. That is 39%.

      Don’t get me started on building supplies.

  9. Jason says:

    We usually buy a 2-3 year used car after our cars hit 10 years old. We have a 2013 Honda CR-V, but haven’t looked seriously at replacing it because my SO is happy with it and the prices feel insane compared to when we bought ~8 years ago. Previously, you could get a $8-10k discount by buying 2-3 years used. Now it looks like you’d be lucky to get $5k off MSRP. ‘course, numbers have suggested that supply/demand is especially out-of-whack for Honda. Here’s hoping that prices will calm down soon.

    • fullbellyemptymind says:

      Without contesting anything else in your comment I need to note that Honda’s inventory is exactly where they want it. They’ve been working toward creating a low inventory environment for a long time.

      Many, many things are dysfunctional about the automotive market, manufacturing, etc., but Honda is not a part of that dysfunction. They’re doing it exactly as they choose because they have the utmost confidence in their product and the loyalty of customers to back it up.

      • Vee says:

        Love my Hondas but with tesla prices falling so much, my next car might be a tesla. Keep reducing that inventory, Honda, so that you can your dealers can maximize your profits. Hope it works out for you in the long run.

    • Fed up says:

      Yeah, 2016 Honda CRV here. Bought brand new in 2016 when they were still somewhat affordable. Only have 22k miles on it because I worked remotely before I retired. I dread ever having to shop for a new one so hoping this one lasts me many more years. Looks brand new. I keep it in good shape.

  10. Bs ini says:

    Yep I’m a fixed income (actually very little fixed) retired 65 year old that was in the oil business but too old to get hired after loosing my job in the shale bust in 2016. Boom bust oil business always possible. No regrets . Thank the oil business in USA for providing a bridge to inflated prices because the cheap oil and electricity provided since the 1980s has made a big impact on quality of life in USA . Higher for longer please. My 36 year old daughter is mentioning the high cost of services after 10 years of the good times after leaving college.

  11. Robert says:

    Worked for a beekeeper as a kid who talked about the Carter days. Sold a used bobcat loader for almost twice what he paid new only to turn around and pay an ungodly amount for a new one. My dad told stories about Carter days, not being able to find anti-freeze and car batteries or plumbing parts and only being able to buy gas on certain days and only a certain amount. Worked for another beekeeper who talk about how he paid 21% interest on his mortgage, think that was during Reagan. What did Mark Twain say about history rhyming?

    • SpencerG says:

      Uhm… Reagan was IMMEDIATELY after Carter. They are part of the SAME history… specifically the same five or six years (1977-1982). The 21% mortgages became a thing of the past when Reagan let Volcker do what needed doing to contain inflation in his first two years in office. Republicans paid a price at the polls at the end of those two years but by 1984 Reagan was re-elected with a 49-state landslide.

      When people tell you that this bout of inflation is the worst in 40 years… they are specifically telling you that it was wrestled to the ground during Reagan’s first term in office and never escaped again until 2021-2022. THAT is the history that is rhyming.

    • sufferinsucatash says:

      Carter IS (he’s still alive) a genius. He even impressed Hunter S. Thompson the author, and he didn’t impress easily.

      However the machinations of the presidency are hard to control.

      He did let vlocker do what he wanted. And things were fixed. Now if Powell would just rip off the bandaid…

  12. Robert Heuermann says:

    Let the scales fall from our eyes, and truly see just what the federal reserve has done lo these last 24 years (and MORE). And it is essentially irreversible, at least without a cataclysm. I’m glad I’m old I won’t have to live past this horror to come

    • Bobber says:

      Yes, the Fed is taking us down a one way path of spinelessness, to a banquet of consequences.

      Shame on the Fed for transferring wealth from hard workers to economic royalists who only push “buy” buttons for a living.

  13. PS1 says:

    bags of wild frozen Haddock went from $16.95 pre-pandemic to $31.95, and it never came back down. I have not purchased any bags since. We never eat out, I mow my .5 acre, I cut coupons, I put off car repairs (once my car got totaled during this wait for repair and it saved me money). I do my own minor home repairs. I can not afford a new nor used car. I am supposedly upper-middle class based on retirement balance and family income. I have retreated to Victor Davis Hanson’s “monastery of the mind” (e.g. no MSM, no progtard streaming, no woke sports [used to do NFL, Tour France and Horse racing]). I am moving to TN to escape this cauldron of sin and depravity. I will carry a 44 spcl and grow tomatoes and apples. Don’t come looking for me.

    • Pea Sea says:

      Just wait until they figure out how to use 5G nanotechnology to make your blood cells woke!

    • Wolf Richter says:


      Not sure why you would want to move to a place that you feel is so dangerous that you need to carry a gun to protect yourself, just to escape from “sin and depravity.”

      • Natron says:

        :D now u mention it…

      • Natron says:

        ..*that.. :)

      • TXRancher says:

        Haha good comment Wolf.
        Maybe he is carrying, like we do in TX, for protection from the snakes. Snakes of all types and kinds.

      • Dick says:

        lol. you lovely Californian. :) You don’t understand Midwest gun culture. Bless your heart Wolf…. and I mean that in a good way.

        • Wolf Richter says:


          Having spent a big part of my life in Texas and Oklahoma, including all of my formative years (17-45), I think I have a pretty good feel for gun culture, and I enjoyed certain parts of it. That’s also where I picked up my bone-dry sense of humor.

        • ApartmentInvestor says:

          Dick wrote:

          > you lovely Californian. :) You don’t understand
          > Midwest gun culture.

          People are surprised to hear that as recently as the the early 1980s groups of “California Boys” ages 12 to 15 would ride 20″ BMX bikes WITHOUT ADULTS from their homes in Burlingame and San Mateo with backpacks full of guns and ammo to the Coyote Point Shooting range just south of SFO. The old rangemaster was a WWII vet (We called him “Mr. Only when it is clear can you step to the Rear”) and would give us shooting tips and when we were getting tight groups with my grandfather’s .308 at 100 yards tell us stories of getting shot at while building runways on islands in the Pacific and returning fire while they worked.

      • TimTN says:

        Wolf has a point. Ex the big cities (like a lot of places) you don’t need to carry a gun. TN is great, wouldn’t want to live anywhere else. Yes, we’re transplants too.

  14. Cobalt Programmer says:

    1. I am happy that you both are okay. Also financially. For a poor family, if a car is lost ability to commute is also lost. Depending on the area you are in, its not safe to walk at night safely.
    2. Woman goes viral for buying a 1998 Ford Escort for $289 a month for the next 84 months. A serious question did she added insurance to it?
    3. Still, Hyundai accent is ~18K. Go Korean…Cars….If you are tall, dont buy it.
    4. Public transport is underfunded, unreliable and not good. Hence, car prices can go up all they want.

  15. RepubAnon says:

    A friend of mine told me that if the air bags deploy, the car is always totaled. This is due to the cost of cleaning up the car’s interior (the airbags apparently spray chemicals around during deployment ). Plus, new air bags and crash sensors…

    Additionally, all those gizmos for things like adaptive cruise control are in the bumpers.

  16. Swamp Creature says:


    I believe the insurance companies total the vehicles and then sell them on auctions where the cars are disassembled for the parts which are worth more in total than the car’s value if repaired.

    I had similar things happen 3 or 4 times as you described above, and in every case I made money on the minor accidents.

    • El Katz says:

      The damaged vehicles usually go to companies like Copart – a salvage auction. Not all are dismantled…. some are sold as is and rebuilt here in the good ol’ U.S. of A. If you’re curious about the process, V-tuned Garage and Samcrac on yootoob are places to take a gander at.

      Current vehicles, with all the sensors, etc., are a Pandora’s Box and scare the crap out of insurance companies. Apparently, a broken/defective taillight on a new Ford F-150 can disable the whole car… and the taillight costs something like $1,500. It’s part of the CanBus system which controls all the vehicle features (sorta like the car’s *network*).

      Our technomobile (now 6 years old) got punched (actually swiped by cross traffic) in the LF fender (wing to some). Took out the plastic bumper cover, the sensors in said bumper, one headlight and the very tip of the fender by the headlight was damaged. Hood fine. Door fine. Suspension / wheel/tire / frame / radiator core support all fine. The car was driveable. The cost of repair? $9,500 – not including the rental (which was only $35 a day paid for by the insurance company via Enterprise). I think I paid $8 per day of that amount. What’s worse is that it took 6 weeks to effect the repair… waiting for a wiring harness from Ukraine.

      I rented a car in FL recently. For 10 days it was $450. More than half was taxes.

    • Wolf Richter says:

      Swamp Creature,

      An auction company picked it up from our place, as I said, and they will auction the vehicle off. That part I know.

      If the mechanical parts, electronics, and chassis are good, a vehicle with 75,000 has some options. Fixing it in a cheap-labor country and selling the fixed vehicle in a near-by country is one option — and a popular option. There is a fairly big trade in that direction. Those people may outbid the salvage yard operators at the auction.

      But if it’s a head-on collision, and the powertrain gets destroyed, no one will want to fix it, and a salvage yard will buy it.

      A totaled old vehicle won’t have the export option. It would be a good candidate for a salvage operator to buy. Or a shade-tree mechanic might buy it and fix it up himself and either sell it or give it to his kids to drive.

  17. Nemo300BLK says:

    While it has been 7 or 8 years, I’ve been in dozens of body shops in the Bay Area, and labor was outrageous back then compared to the rest of the country. Back then, the posted hourly labor rate in the Midwest and South was in the low $40s, and in the Bay Area, it was $110++, depending on the shop.

    It was prevalent to see faded cars that lived outdoors “keyed” down one side, across the hood, and down the other, getting a complete paint job via the insurance company.

    • Reply says:

      A dealer in LA said that his posted labor rate is now $175, up from $140, and that he has a very hard time recruiting new mechanics due to the labor pool looking elsewhere. He is worried about retirements and all that knowledge walking, or hobbling, out the door every night. If you know mechanics, you will hear about their health problems, starting with the feet and working up.

      Younger people used to grow up working on cars and that faded away due to complexity, distractions, cost and pick your favorite other factor.

      Some of that labor rate escalation is due to cost of living, with housing tight and rents escalating.

      • Greg Hamilton says:

        His labor rate may have gone up, but the pay to his mechanics didn’t go up the same percentage. Mechanics at car dealers are not getting paid what they should imho, the service writers on the other hand…

        • Depth Charge says:

          This is it in a nutshell. Back in the day, flat-rate mechanics generally got paid half the shop’s labor rate. So, they’d be getting $87.50 of that $175 per hour. Greed set in, and now they are paid an hourly rate which is peanuts.

    • HowNow says:

      Sounds clever but wait ’til next year’s premium shows up.

  18. top gnome says:

    We are in a similar situation our 15 year old van is starting to rust and we do not feel it is as dependable as we would like. so I looked for a used vehicle and I can get a 6 year old Mazda cx5 for 25000 or a new one for 34000 so the new one, sticker shock. but what is interesting is the van we were unsure of the going price so are taking bids and started at 3k we are up to 7k on the bids with a few willing to go to 10k if they can get financing. the van has low mileage but it is still 15 years old. We paid 25k for it used in 2010.

    • Martín says:

      It is baffling for me that you would be paying $25,000 for that 6 y/o used CX-5. Here in Chile you will find several of those under $15,000, some of which with less than 50,000 miles on them.

      Maybe someone should start sourcing used cars back to the States, the way we have sourced used cars from the US in the past.

  19. Brian says:

    When my 19y son was thinking of getting a car, he took one look at the insurance costs and decided to stick with the bus. And I was offering the pay for the (10y old Mazda3) car!

  20. Anthony A. says:

    Just turned 80 recently and moved into a less expensive house and area after my wife died last year to keep expenses in line with less income.

    I just got my car insurance bill last week and it’s up almost 50% from last year. Maybe getting older has something to do with this increase, but no claims in decades must help offset that.

    I asked my broker to “shop it” for a lesser cost and she said “they already did”.

    On a good note, I did find Honeycrisp (Minnesota grown) apples on sale at the grocer for $0.97 per pound when last week they were $2.97 per pound. I stocked up.

    • El Katz says:

      It’s misnomer that zero claims reduces your insurance costs – they simply slow down the increases. Insurance is a pooling of funds to cushion catastrophic losses for the entire population of insureds. The people who screw insurance companies pass their costs on to you, even if you’re honest.

      As an illustration: Had an interesting experience with my Medigap policy this year. Got the “renewal” quote (your annual birthday present) and it was pushing $250 a month (up from $130 when I started 6 years ago). I called my Medicare broker and she said I could get the exact same coverage with the exact same company for $158 per month by moving to a different group. Apparently, the folks who can move out (reasonably healthy) do, the old group plods along with all the not-so-healthy left in that group, and the rates skyrocket as a result as the claims frequency and expense for that group is higher.

      I. Did. Not. Know. That. But now I do. Insurance is tricky.

      • Arnold says:

        I have never understood why Americans love dealing with insurance.

        • Kent says:

          Americans just don’t know any better. It is pretty much mandatory for most. If you have a mortgage on your house, your mortgage holder requires that you maintain home owner’s insurance. Most states require all citizens have auto insurance. A trip to the hospital after a car accident will bankrupt most Americans without health insurance. Apparently it is all necessary to live in a “free market” system. Of course when the price goes up we blame the President.

        • Tom S. says:

          American politicians* love dealing with insurance.

          Fixed that for you.

        • Obfuscation Eschewer says:

          American’s don’t have a choice. We also are forced to drive amongst millions of uninsured drivers who recently arrived from other countries. Add in the tens of thousands of Hyundais and Kias that are now only good for free joyrides for social media enthusiasts and you can easily account for at least a double digit portion, percentage wise, of insurer’s operational cost increases.

      • All Good Here Mate says:

        You know what else drives auto insurance costs?… your zip code.

        I used to live in a place that was surrounded by ghetto on all three sides and only had to drive about 12-miles to work. Had my truck stolen while I lived there. My place wasn’t too bad but the neighborhoods around it were the pits.

        I moved far away and had a commute of 97-miles one way. My rates were cut in half.

      • William Leake says:

        What do you mean by “group”? Medigap has plans, not groups. Sounds like you were moved to a different plan, which may have similar, but not the exact same coverage. Better call your broker.

        You can shop companies and get wildly different premiums for the exact same plan.

        • El Katz says:

          No, Mr. Leake, you are wrong. It’s a Plan G just like the Plan G before it. In a perusal of my ID card, the term is “coverage number” and it’s for exactly the same plan…. with a different “coverage number” which is a different pool of insureds.

          As it was explained to me, the older plans / groups become non-competitive after they get loaded up with people with high claims incidence and healthy people roll off looking for lower premiums. So the insurance companies no longer sell that “group” and open a new one… exactly the same Plan G, but attract healthier people who can pass the screening and results in lower claims because the “group” of insureds is healthier or younger or both. They can then advertise a lower premium and are again competitive with the market. Not everyone can make the transition because of the health screening questionnaire and are stuck in the higher cost plan.

          In other words, you can’t buy the old Plan G I had any longer. You can buy the new Plan G. Old plan is closed. New one is open. Coverage the same.

          All I know is that the ID card has the same “Plan G” on it as the old one. Only difference is the “coverage number”. The premium taken from my checking account was $158 and change.

        • William Leake says:

          Katz, interesting. In California, I did not think that was allowed. So they closed the old Plan G, but kept the old Plan G buyers at a higher rate. And then you had to get underwritten (to see if you are healthy enough) to qualify for the new Plan G which is a lot cheaper. Seems a little shady. Medicare is strict about this kind of stuff, but maybe it is okay. Maybe it is peculiar to your insurance company. What’s the name of the insurance company, if you want to give it to us?

          I have Plan F, which is no longer offered, but I got grandfathered in. Expensive, but it pays for everything. I get no bills. I buy from the cheapest company each year since they all have to offer the exact same coverage. There is a 60 day period once a year where I can change companies without needing underwriting (a California law).

  21. Jason B says:

    Good anecdotal example. It is not just cars. Also in housing, goods and services. Even the cheapest haircuts in my neighborhood doubled since pandemic. Thanks to the reckless money printing many times, now the motto is “the thing you don’t buy today will be more expensive tomorrow”.
    Despite the official statistics, most of these things are 50% or 100% more expensive than prepandemic.

    That’s pretty normal. FED balance was around 4T in Feb 2020. Now it is (reduced to) 8T. The amount of printed money is two fold. Therefore goods, foods and labor is getting more expensive. Workers are (in my view, rightfully) hitting with strikes, because many could not get raises that keep up with the inflation they actually face. To me, the official inflation statistics do not reflect what I observe around me. Maybe because of “hedonic adjustments”, or shrinkflation (like, many retail shops which were open 7/24 are not anymore or undetected cost increases (like more restaurants charging 20% mandatory “gratitude”, etc.). Rate hikes alone can’t stop this alone, unless accompanied by fast and steady QT.

  22. The Big Guy says:

    The crazy cost of vehicles and insurance can provide some hidden “gotchas” for people that don’t think deeply about such things. I wanted to take my family to a ball game in the big city a few hours away and rented a big SUV so we could all fit in one vehicle. I realized that the value of the vehicle we were renting was about $80K, and if we wrecked it the rental company would also charge us for lost use of the vehicle, so I needed to make sure I had coverage for at least $100K. People say to use a major credit card and that will cover your rental insurance, but my credit card company only covers up to $50K, which wouldn’t even cover the vehicle. Some personal auto insurance coverages also cover rental cars, but mine didn’t, so I ended up adding a rider for the time I rented the vehicle just to be safe. It was cheaper than paying the rental companies insurance, but still more than I had expected.

  23. Mike R. says:

    Insurance funded car repairs is “an industry” in the US. Insurance companies require comprehensive and collision coverage on financed cars and so when minor damage occurs, in the shop it goes for an expensive repair/repaint, etc.

    Since the cost is spread over millions of policies, the car owner pays their deductible and thinks they scored big. Of course their premium is high and adds up over time and everyone else that never requires repair pays the cost.

    We own outright older, serviceable autos and only cover liability (required) thus saving thousands in insurance premiums. Of course we have to bear the risk of loss, should that happen.

    In the good old days of a sober economy, few bought on credit and thus insurance was much more affordable.

  24. Mike R. says:

    Good article on the inflation front showing detailed impacts.

    Again folks, the Fed engineered this inflation taking advantage of the COVID shutdown and free money in the pockets of the little people; unlike QE.

    It was somewhat of an experiment, similar to what they were considering with MMT….money in the pockets of the little people.

    And it worked!

    Anyone wringing their hands that this will run out of control. Don’t.
    First, the Fed very much desires this inflation to play itself out. Wage hikes/lesser price hikes/lesser wage hikes, etc. take time to dampen out. But the Fed doesn’t want to lose these gains.

    Like all inflations, people out of the workforce (like me…retired) get screwed bad. Equally are probably the low income set of society, but as long as government can run deficits and help them along with social programs, they get by.

    Have-to-have industries for the most part keep up. Nice-to-have stuff sees demand destruction and those who lose jobs have to shuffle around.

    It is not a pleasant experience for a society. But Powell had no choice. Debt is out the wazoo and the only credible way to reduce it is through inflation.

    The real question though is how this impacts the rest of the world and how they see the US moving foward and how much they will continue to fund our largess.

    • DownFed says:

      It’s a bit more diabolical than that. What this QE business does is end free market price discovery and substitutes government managed price discovery.

      So, what did corporations do? They swapped equity for debt, and increased their leveraging, while reducing their equity via share buybacks.

      Now that the swap from equity to debt is complete, they need the Fed to inflate away the debt, so that the heist is complete. And that is exactly what the Fed is going to do.

      This federally managed price discovery is designed to widen wealth inequality.

  25. Motorcycle John says:

    A friend had the exact same thing happen. I asked what the totaled value was and if they could buy it back at that price? They bought it back and had a retired body man make the repairs.

    Original cost of the car in 2019 $16,000
    Salvage value paid $4.000
    Cost to fix the damage $2000
    Parts needed for the repair $1500

    Total outlay $20,500

    Check paid to my friend by
    the insurance co.
    to cover the loss $24,000

    So my my friend got all his cash back , the car back, the car fixed, and made a few bucks! That is just amazing.

    Purchasing power is fallen thru the floor but there is another reason not yet listed.

    Regulation and fear of litigation has forced all forms of business to go to extremes on everything. This car was “fixed” for $2000 not “made new”. Only needed two new wheels and new front fender and used the old one to repair the rear quarter panel. It looks good and drives just like it used to. It carry’s a salvaged title. The bid to make new was $18,000 and they listed everything under the sun that “may” need replacement.

    No wonder insurance is 50% higher. Next step is treating vehicles like appliances. Throwaways.

  26. Marjoram says:

    I am grateful to hear your wife was not injured! Terrifying accident.

    The Manheim Used Vehicle Index roughly matches with a lag the increase in premiums you describe above.

    How long does it take after the moving average of the high volatility components of the inflation indexes that are stripped out start to be reflected in core inflation? You still have to buy food and energy and insurance. As you point out, everyone knows shockingly higher prices are here already.

  27. Desert Dweller says:

    Wolf’s comments about his personal experience with inflation in his life is a powerful testimony as to why so many average Americans doubt the official inflation numbers from the Fed.

    • Wolf Richter says:

      FYI, the CPI for used vehicles spiked by 60% from June 2020 through June 2022.

      A lot of other stuff hasn’t gone up, consumer electronics have gotten cheaper — you can buy a powerful laptop today for $800 that you’d have to pay $4,000 for 10 years ago, if you could even get a laptop with this processing power, memory, etc. — and a lot of other stuff has gotten cheaper, such as furniture (now made overseas). I can give you a great personal example of that! People forget about the stuff that gets cheaper, and only remember the stuff that hurts. But overall inflation rates include the things that get cheaper too.

      • Maggie says:

        I will *gladly* pay $10k for a new TV or computer if we had universal Healthcare. The employer-tied health serfdom is insanity. Even Canada does better.

  28. Hubberts Curve says:

    My 1993 E300 Diesel Mercedes was backed in to by a commercial truck while in my parking space at my shop. The trucking companies insurance company came out and inspected it from top to bottom ( rear quarter panel) and I was sure it would be totaled. But instead they cut me a check for $2800 and said I was lucky the value of my car had gone up so. much lately. I guess it is now a classic and worth $8000 or so.
    My only problem now is I can’t find a body shop that will work on cars over 20 years old, even though the insurance company located and priced out the new parts ( yes Mercedes has parts for any age car) and salvage panels.
    Luckily these things are built like a tank and the damage did not make it though the outer sheer metal, and it still drives straight and true.

  29. TeeGee says:

    A wake up call for sure on the economics of an automobile collision. Thank goodness that your Mrs. was not injured…then the next Wolf report would detail the economics of health care costs.

  30. Flaming Anarchist says:

    All 3 of our kids graduated from college/university this year and needed a car for their jobs. Having bought used cars for years for our family we helped them out. Our used car prices here in Canada are insane. We gave each kid a budget of 10k. We had every car inspected by a mechanic. 2 of the 3 cars in this price range were rejected because of needed repairs. We wanted to purchase a Toyota or Honda each time but prices were just too high. This is what we got for 10k

    2010 Hyundai Elantra-145000 kilometers. Bought in Halifax Nova. 9k purchase price, $1000 in work needed. Daughter drove it for a year, moved to Calgary Alberta for a job and needed $2800 in repairs to pass a provincial safety inspection.

    2014 Hyundai Accent 52000 kilometers. 11k. Rear brake work needed. Un repaired dent and cracked front grill. Best car we could find at the time.

    2010 Mazda 3. This car came from Vancouver and was an insurance rebuild. 10k. Rejected 2 other cars with inspections before purchasing. 1 month later after inspection power brake booster failed.

    Repair costs here are $100-$150/hour.

    My wife bought a 2012 Toyota Matrix higher end model in 2019 for 12k. We could sell this car after 5 years for the same price.

    • georgist says:

      > Our used car prices here in Canada are insane.

      Food prices are insane.
      Housing prices are insane.
      Car prices are insane.

      Joint the dots. Your labour in Canada is worth next to *nothing*.

      • 91B20 1stCav (AUS) says:

        “…when the going gets insane, the insane turn pro…” (…with apologies to H.S. Thompson, RIP…).

        may we all find a better day.

      • endure says:

        I agree the inflation is bad and can make one feel disillusioned but every bit of hard work will ultimately pay off. I wouldn’t want someone to think their effort doesn’t matter and then miss out on the rewards.

    • georgist says:

      Also in wonderful Canada auto theft is increasing massively.
      Up 50% in Quebec, presumably as more and more people turn to crime to make ends meet.

      • Gen Z says:

        Montreal is the port where the stolen cars get shipped abroad. How can any Canadian survive when a home is a million dollars, and wages are $17/hr on average?

        • georgist says:

          Answer: they can’t.
          You either own already or you don’t.
          Just like England in 1600.

        • RDE says:

          How can any Canadian survive?

          Steal a car a week. Drive it to the docks in Montreal and sell it for cash.

  31. Glen says:

    I was an idiot and backed into a pole even though I have a rear camera. Bumper and part of tailgate replaced. $500 for parts and $7500 for labor although just $500 for me. My old Dodge Dart would have had a small ding although admittedly the newer design are much safer for the individual as they absorb the force but labor costs make almost everything a total. For reasons I don’t know and am not asking them they didn’t raise my rates. When I was overseas my iPad broke where lightening connector went in. In US that would have been scrap but there it was $30 total. Not suggesting we have labor rates similar to SE Asia but perhaps could be designed to not be so labor intensive to fix.

    • dishonest says:

      They’re designed for you to buy a new one.
      Get with the program citizen.

    • Fed up says:

      I wouldn’t have used my insurance for that. I’m surprised they didn’t raise your rates.

      • Glen says:

        Surprised my rates didn’t go up either but I have been with them awhile and have homeowners which they make a bundle on. I can’t do the work myself and my tailgate wouldn’t open so certainly needed to use insurance. I get if it was $1000 with a $500 deductible but not for 8k.

  32. georgist says:

    Median sales price of housing:

    2020 Q1: 329k
    Present: 416k
    Up 25%.


    1995 Q1 : 130k
    2020 Q1 : 329k
    Up 250%.

    But we were told inflation was below 2%.
    All the people who have the clout to make noise in the media own houses.
    Nobody was complaining about something that either didn’t impact them or was beneficial.
    Now suddenly *they* have to pay more for cars, food, etc, and inflation is suddenly visible to them.
    And the extra cost of a car or food is manageable. You just can’t have your little treats on top so easily.
    Housing costs completely detached from incomes and there was nothing younger people could do about it.
    Yet this was completely ignored by older generations. That is disgusting.

    • Wolf Richter says:

      Asset prices (prices of real estate, stocks, etc.) are not included in consumer price inflation. Only consumption items are included in consumer price inflation. Asset price inflation is tracked separately, such as housing prices by various home price indices, which I report on separately.

    • HS86 says:

      Thank you Wolf for calling this asset price inflation rather than asset price appreciation.

  33. Kevin Johnson says:

    Great article Wolf, you hit the nail into the coffin regarding inflation. For me, the bigger issue is the constantly, artificial meddling the Feds inflict on what used to be an open market. Their QE has destroyed the quality of life for most Americans. We watch the comedian, mindless Fed personnel like Powell, manipulate the market without a clue as to what they are doing. Look back in history, when Powell ran a successful, Milwaukee-based, high-end ball bearing manufacturer into the ground; then his criminal, colleague investors/bankers hailed him as a hero. He took a company that was millions of dollars in the black, into one that incurred over one billion dollars in debit, which he accomplished by bringing in Swiss bankers that specialized in repackaging and selling debit—like today’s common practice with all the zombie/corpse businesses that flail and fail. Unfortunately, this dysfunctional thinking is rampant across corporate America and government. It’s like a cancer that’s eating our country into oblivion.

    We need more people like you, Wolf. All Hail the Wolf :)

    • Shiloh1 says:

      Thanks for the footnote – as a vendor in a past life I dealt with Rexnord and Falk in the ‘80s and they werd well-run. No surprise ruined by private equity, but did not know clown Powell was involved.

  34. kiers says:

    Zipcar auto insurance premium have doubled in last 6 months: what used to be a $9.99 monthly add-on (zero deductible) went to $19.99 per month (zero deductible option).j 3rd party coverage is extra, mind you. For zipcar this coincided with the on-boarding of Tesla into the fleet.

    You never know how our capitalism works. It’s all in private. Perhaps insurance cos are preparing for a future, on-boarding, driverless cars, which initially may have higher crash rates at fault?

    Perhaps, the entry of private equity players into the insurance premium game…even auto repair insurance is now a “thing” (“If your check engine light comes on it’s “game over” “, they say).

  35. Bill says:

    Seems like the FEDs worst fear. Inflation expectations have arrived

  36. spencer says:

    “One man’s spending is another man’s income. When people are unsure about the future, they hoard their cash and sit on their hands. This reduces income to the next man, which likewise causes him to hoard cash and sit on his hands. This cycle repeats until the entire macro economy finds itself in a self-induced recession.”

    But with C-19 we have dis-savings. The composition of the money stock has changed. Until recently, 2023, the demand for money demand fell.

  37. ApartmentInvestor says:

    Wolf wrote:

    > Stunning item #2: Repair costs, so parts, labor, paint,
    > and supplies.

    As cars become more complex “repair” shops are turning into “replace” shops where they just “replace” all the parts that were damaged in the accident (not many old school guys with a hammer and dolly beating a fender back into shape after a “fender bender” anymore).

    • El Katz says:

      Many of the components on current vehicles are of the “no serviceable parts inside” design. That’s why they’re now called “automotive technicians” and not “mechanics”. Mechanics fix stuff….. technicians R&R modules…. more affectionately known as “firing the parts cannon”.

      • 91B20 1stCav (AUS) says:

        ElK – in the moto-biz, ‘technician’ was our euphemism for a ‘parts changer’ (…sadly, towards the end of my time in that career, that was the skillset level of too-many of the graduates coming out of the ‘trade schools’, ‘ticket-punched’ and short-changed by same…).

        may we all find a better day.

    • Mitry says:

      Paintless dent repair (PDR) still exists as a trade. I’ve seen the kits with the slide hammers. My mechanic, who runs a shop with 6 bays, showed me a video of how one of his guys used dry ice around the perimeter of a large dent and popped back into shape. I guess you have to know which dents are amenable to PDR, and when to just replace and paint a body panel. There are guys who sell Raspberri/Pi modules to hack your CANBUS and get past the “mating” procedure to get new electronics to work. But I agree that you’re less likely to find a skilled mechanic now then you might have been 2 decades ago.

  38. El Katz says:

    Yeah. Everyone in the older generations conspired against their own children to destroy their future. Got it.

    Many of us were passengers on the same bus as you, whether you want to admit it or not. I couldn’t afford a house in SoCal when I was in my 30’s and 40’s. Not a snowballs chance in hell. I was too busy paying for schooling…. and in my early 50’s I was paying two college tuitions plus room and board for both kids while trying to pay a mortgage on the house I bought in SoCal for way to much money as the result of a job transfer – and the mortgage rate was @7% at the time.

    The blame lies with the people that vote for “gimmethat”. Free this and free that. Borrow money for school they have no ability or intention to pay back. Free money raises costs. Just look at how “affordable” health care has become in the U.S. since the launch of the “affordable health care act”. Few cheering from the crowd realized that was the best gift ever given by a politician to the insurance industry. Remember the quote: “You have to vote before you can read it” (or something to that effect). And no one got a free set of “bracelets” and a trip to the grey bar hotel as a result.

    The point is that there are as many hustlers and grifters in the younger demographics as there are in the older. Those add to the carnage as well. (Like the work from home guy screwing his two employers that don’t know of each other and knocking down $500K or whatever he was bragging about). He’s out spending those dollars, adding fuel to the fire.

    • Arnold says:

      People forget how affordable medical care was only a few short years ago. I remember going to the hospital for surgery and paying the bill with the change from the ash tray in my car.

    • Einhal says:

      Who was in power when TANF/Obamacare/etc. was passed? Certainly not Millennials/Gen Z

      • Wolf Richter says:

        Obamacare benefits younger people the most. Majority of boomers are now on Medicare (after having paid into it all their lives), not Obamacare. They get SS and don’t need TANF.

        • Einhal says:

          Yep, that’s fine, I’m just saying that you can’t blame the younger generations for these programs, as they were in diapers when they were voted on.

      • sufferinsucatash says:

        I think obamacare was invented to help single mothers who made $16,000-$50,000.

        I actually helped someone get on it when it first came out and it was extremely complicated.

        The silver plan was really nice and affordable. It would cover almost anything, was great insurance thru blue cross and blue shield.

        Then after 2-3 years the program realized it was costing a TON and so they raised even the silver premiums a lot. Still, it was worth it. Especially if this demographic, single mothers needed a costly medical procedure like an emergency appendectomy or trauma from a car crash.

        the program prob got the worse press ever though, which was unwarranted. Who doesn’t want to help single mothers who make very little?

      • phillip jeffreys says:

        Medicare was voted into law in 1965.

        Boomers = 1946 to 1964.

        Most Boomers weren’t of voting age either.

    • HS86 says:

      A lot of people on this comment forum shared experience of insurance payouts that are easy, quick, more than expected, and in earlier years they were a great deal, and in past 2 years they were a good deal unless you need to buy a equivalent replacement.

      But I thought Auto insurance company supposed to keep their margins by taking in more premiums than they payout, having a deductible, and having negotiated contracts with repair shops with lower than retail cost due to volume discount, you know, how it is supposed to be for medical insurance companies, to attract subscribers?

      At this point people blame the mandates, but imo, even with the mandates there should be plenty competitions between companies, each should be trying to negotiating contract/group pricing, and there should not be room for any incentive that one could “make money” through an insurance event. I’d think that’s an insurance company’s job function.

    • Cookdoggie says:

      “ The blame lies with the people that vote for “gimmethat”.

      That’s now every candidate in the country. There are different labels: tax cuts; tax credits; subsidies; support; benefits. It’s all free candy being handed out. Nobody wins running on responsibility platforms. The choices are vote for gimmethat or don’t vote.

  39. dishonest says:

    What goes up must…stay up for longer than eternity. Once the insurers have tasted that sweet,sweet profit they’re not gonna wanta reduce premiums even when their costs go down.

    Water is wet.

    Prices up longer than eternity, as it were.

    Au revoir, mes amis

    • John H. says:


      “ Once the insurers have tasted that sweet,sweet profit they’re not gonna wanta reduce premiums. “

      I always thought competition applied to property casualty industry. Profit is determined by sales and margin. If a firm’s margin is too big, then an upstart competitor undercuts prices and eats into your sales.

      At least that’s how it used to work….

  40. carlos leiro says:

    I always ask myself: Who and how and where measures inflation?
    If you have to pay rent, buy a car and maintain it, do a university degree in X area, and you have one of the best health insurance and other insurance, what is your inflation?
    If you don’t have a car, you have your home and you are going to do a non-university intermediate degree and you live in Y area, and you have minimum health insurance and other minimum insurance. What is your inflation?
    If you live in a house that you are paying the mortgage on, you have a minimum education, you live in a U area and you do not have health insurance and you only pay what is essential in insurance. What is your inflation?
    Of course you should do the costs well, including an average change of goods due to breakage or time of use, a calculation of costs in unexpected events that are not covered by insurance.
    So when we relate income or expenses adjusted to inflation, what do we stick to?

    • HS86 says:

      For years I seen Wolf’s reply to commenters who either say insurance is way higher than the official report CPI or rarely, way lower. It’s a national average statistic , and no one has exactly 0.78 kids isn’t it? Even when I search for CPI by region, I doubt any of us will fit neatly in the averages for Mountain, Pacific, Midwest, Mid Atlantic…. etc averages.

  41. sufferinsucatash says:

    Sorry that you had to go thru all that wolf.
    I totaled a car before the pandemic and went thru all that as well. Brand new suv, and they gave me more than I had left on the car loan. Went right back to the dealer up north and bought another. The guy was surprised I was back! They found one straight from the factory and had it shipped by train. Or something like that.

    Car wrecks are no fun to go thru and the consumer is just getting killed these days.

    My salary has gone down 22% by inflation calculator as of last checking. I’m really disliking this time period. :(

    • HowNow says:

      Years ago, I became friends with an immigrant from Argentina. His father was an econ. prof. at a university in Buenos Aries, and he was an author of a few novels. He explained to me that inflation destroyed the country’s middle class.
      Maybe that’s what we’re going to see here. The upper-, upper-class will be unfazed.
      Regarding health care, the private equity firms and similar are actively acquiring hospitals, medical practices, health care information systems, labs… That’s where there are no ceilings to price adjustments.
      No one in a p e firm wears a Santa Claus outfit. Any bets on how this will play out??

      • sufferinsucatash says:

        Yeah, an Economist did an article in May and said the real middle class now makes $216,000 a year with 2 kids. They live a boring but secure lifestyle.

        So there ya go.

        • HowNow says:

          The “real” middle class? Who is this Economist?

          Here’s an excerpt from the U S Census Bureau regarding income for American households in 2022:

          Real median household income was $74,580 in 2022, a 2.3 percent decline from the 2021 estimate of $76,330 (Figure 1 and Table A-1).
          Householders under the age of 65 experienced a decline in median household income of 1.4 percent from 2021, while householders aged 65 and over did not experience a significant change in median income between 2021 and 2022 (Figure 1).
          The money income Gini index decreased by 1.2 percent between 2021 and 2022 (from 0.494 to 0.488); this represents the first time the Gini index has shown an annual decrease since 2007 (Figure 3 and Table A-3).
          Between 2021 and 2022, the number of full-time, year-round workers increased by 3.4 percent, compared to a 1.7 percent increase in the number of total workers. This suggests a continuing shift from working part-time or part-year to full-time, year-round work.
          In 2022, 65.6 percent of working women worked full-time, year-round. This is the largest share on record.
          The real median earnings of all workers (including part-time and full-time workers) decreased 2.2 percent between 2021 and 2022. Median earnings of those who worked full-time, year-round decreased 1.3 percent (Figure 4 and Table A-6).

        • Wolf Richter says:

          That’s the impact of the spike of inflation in 2021. The first half in 2022 looked similar or worse. Inflation sucks.

          But in late 2022 and all of 2023 median incomes outgrew inflation, and real median incomes grew.

  42. Not Sure says:

    Refreshing to see an article showcasing inflation out here in the real world. The gov can run all kinds of razzle dazzle with their seasonally adjusted, revised, “real” numbers with hedonic analysis and all kinds of other B.S. “adjustments” figured in. They say the dollar has lost a paltry 30% of it’s value since 2013, but at the end of the day, we consumers know they’re full of it. Price is first and foremost the measure of the dollar’s value much more than it is a measure of a product’s value. This is simple… If a basic 6 year old car with 50k miles on it went for $10k a decade ago and now a 6 year old car of similar status with 50k miles on it goes for $20k now… Then the dollar has lost half of its value in the car market ovet that decade. House prices and rent are now easily double what they were 10 years ago in most places, even more in some places. And food is easily double what it was 10 years ago everywherr… Even the decade’s past $5 footlong is now a $10 footlong at subway (that’s bread, produce, meat, dairy, and condiments all in one).

    The gov can say what they want, and the BLS inflation calculator can spit out whatever numbers they decide it should spit out, but that is all meaningless to the average American. In whatever order, a roof over one’s head with utilities, food, and transportation generally round out the top 3 costs for most Americans. If all 3 if those things have doubled in a last decade, then as far as the consumer is concerned, the dollar has lost half its value in that decade. Nobody is standing around the grocery store impressed with the hedonic improvements they’ve seen in the produce section. Nobody cares that a very occasional laptop purchase has become a little cheaper. They hate inflation, hate it when it hits them where it counts in their major day-to-day expenditures.

    • SoCalBeachDude says:

      I would suggest you check out the prices of commodities nearly all of which have been DEFLATING very sharply for some time.

    • Wolf Richter says:

      The CPI for used vehicles spiked by 60% from June 2020 through June 2026. The CPI didn’t ignore it, and I discussed it many times.

      A lot of other stuff hasn’t gone up, consumer electronics have gotten cheaper — you can buy a powerful laptop today for $800 that you’d have to pay $4,000 for 10 years ago, if you could even get a laptop with this processing power, memory, etc. — and a lot of other stuff has gotten cheaper, such as furniture (now made overseas). I can give you a great personal example of that! People forget about the stuff that gets cheaper, and only remember the stuff that hurts. But overall inflation rates include the things that get cheaper too.

      • 91B20 1stCav (AUS) says:

        …mebbe more of a case of “…a thousand cuts…”?

        may we all find a better day.

      • HS86 says:

        But Housing and Auto does cost a big percentage of personal income. So it is right for people to want to see those line items separately and apply their own weighting (commenters above).

        I know and appreciate Wolf that you already do this via the Camry and F150 index :), perhaps next time add the Platinum model and I suspect people will be thrilled to see that mainstream inflation is a bit subdued when compared to the ultra high end. Except those folks who still want to keep up with the Jonenes.

  43. CuriousZiggy says:

    Why isn’t there more public outrage over the understatement of government inflation numbers(CPI, PCE)? Over the last 3 years all of the consumption items are up 30% to 50%…the math can’t compute to the government telling us its only 18% to 20%. Where are the pitchforks outside the BLS & the Eccles buildings?

    • SoCalBeachDude says:

      Many prices are falling sharply into very serious deflation now.

      • The Struggler says:


        Look at longer term charts. Oil prices are well above the past 10-year average, as are gasoline.

        Wheat spiked and has settled at a higher price than the last 10 years. Sugar is up in the same manner and stable to up.

        As oil and fuel stays elevated, so will everything else.

        The Saudis want $90 oil, and will get it with production cuts.

    • Wolf Richter says:


      The CPI for used vehicles spiked by 60% from June 2020 through June 2022.

      And some stuff has become cheaper, such as consumer electronics — you can buy a powerful laptop today for $800 that you’d have to pay $4,000 for 10 years ago, if you could even get a laptop with this processing power, memory, etc. And a lot of other stuff has gotten cheaper, such as furniture (now made overseas). I can give you a great personal example of that! People forget about the stuff that gets cheaper, and only remember the stuff that hurts. But overall inflation rates include the things that get cheaper too.

      It’s hard to have a reasonable discussion about inflation when people through these idiotic fantasy numbers around.

      • Einhal says:

        Goods have gotten cheaper, but services are through the roof. Not all of it is inflation, but just the Baumol cost disease. Everyone should read up on it if they haven’t already.

      • TXRancher says:

        “The CPI for used vehicles spiked by 60% from June 2020 through June 2026.”

        Dang second time you said that. “2026” I have missed 3 years of my life somewhere.

  44. Gen Z says:

    In 2020, a 2-year old Ford hybrid for $15,000 USD ain’t bad.

    But quite surprising in 2023, that a 3-year-old Ford hybrid went for $23,000 USD.

    You should check the listings for second-hand cars and minibuses in Japan exporter sites: 50 people rushing for a car listing. Still happening.

    • andy says:

      Gen Z, if you must have a car, and have place not to pay for parking, get convertible coup BMW 3-series. You can get 2011-2012 for $10-12K that will look like new. These cars will go up in price, and will be collectors item. You can later drive it US when you move.

  45. shangtr0n says:

    Wolf, I’m sorry you had to experience this. Being down over $5,500 you had no intention of spending (plus all the accompanying inconvenience) is a real kick in the face after getting rear-ended. But most of all I’m happy that your wife is ok and wasn’t injured.

    • Wolf Richter says:

      The $5,500 was spent on a car that is two years newer and has 40,000 fewer miles on it. We could have come out even had we purchased roughly what we had. We decided that if we have to buy we want to stay in our sweet spot when we buy.

  46. SoCalBeachDude says:

    MW: US Treasury-market selloff has become the worst bond bear market of all time, according to BofA

  47. Einhal says:

    I’ve said it before, and I’ll say it again. The fact that major unrest in an already unstable area of the world is seen as an excuse by Wall Street to party shows that the Fed hasn’t done even remotely enough of a job stamping out speculation.

    Until the “animal spirit” is destroyed, inflation will NEVER be brought under control. Period.

    • Z33 says:

      Wars are profitable and is why out of 3,400 years of human history less than 300 didn’t have war. They result in more government spending, which in turn is inflationary and devalues currency in longrun…

      • Einhal says:

        War creates massive destruction. It is no profitable for the economy as a whole.

        • Z33 says:

          The US had a boom after WW2 because the rest of the world was destroyed so US were manufacturers and exporters of production. US debt to GDP also decreased with the inflation post-WW2 (up to 20% inflation in 1947). Very profitable for the military industry initially and those that are paid to rebuild after destruction.

      • Sams says:

        War have been profitable, but there are signs that they may not bee in the future. To expensive to fight and to little to plunder…

    • jon says:

      Not pointing at you but I am surprised that People still have faith in FED to tame the asset bubble.

      FED members ( along with their friends and masters ) themselves are holders of 100s of millions of different assets and they would never allow asset bubble to burst.

      Don’t look at the recent QT which has brought down FED’s balance sheet by 1T or so. Look at the bigger picture in last 30 years or so where dollar has lost 70% of its value.

      This article is again testament to collapse of dollar. This is happening everywhere not only in areas related to auto.

      Bottom line: Govt inflation metrices are/would be fudged. FED’s balance sheet would keep growing with time. USD would keep losing its value ( not w.r.t. other currencies but w.r.t. essentials of life ).,Middle class would keep paying for it in one way or another. Poor people does not have much to lose, Rich people are sitting pretty in different assets.

      Come back and let’s talk about this again in 5-7 years when FED’s balance sheet would be much higher than today.

      • Einhal says:

        I agree with you that the Fed does not have taming the asset bubble as a goal. It has reducing inflation/protecting the dollar as a reserve currency as its primary goal. If it can do that while still maintaining the asset bubble, it’ll consider that a success.

        HOWEVER, if it is forced to choose between protecting the dollar and protecting the asset bubble, I believe it will pick the former.

        • jon says:

          If you looked at the big reversal in market today and wondering why: It was one of the FED’s dovish comments which reversed the market.

          We all need to see the true color of FED and for whom they work. This would be a good beginning.

        • Einhal says:

          Did you actually look at the statement Jefferson made that was considered “dovish?”

        • Einhal says:

          jon, if that was the case, they wouldn’t have stopped printing.

          Look, the Fed sucks. I get it. And the Ds are just as bad, with its vote buying schemes. But at this point, I do think the Fed is trying to protect the dollar, as that’s where it derives its power. If the currency collapses, they’re no more important than the central bank of Venezuela.

        • jon says:


          FED stopped printing because they have to maintain the appearance aka public opinion that they are trying to curb inflation.

          As I said before, Let’s revisit this after 5 years when FED’s balance sheet would be much higher than $10T.

          In 2010, if someone said that FED’s balance sheet would be $9T in 2020s, they would have laughed off.

          Same thing would happen by end of this decade when FED’s balance sheet would be much higher than what we have today.

          Going by all the articles WR is creating, looks like inflation is entrenched, still raging and it is not going down.
          If you believe these articles, then FED’s hiking rates and QT are not really working.

          It also means that they need to accelerate QT and sell MBS as well. We all know that FED is not doing this.

          FED has been too quick to increase their balance sheet from 4 T to ~9T but when it comes to QE, they have been super slow.
          On the other hand, FED had absolutely no business keep buying MBS when housing market was on fire, but they did.

          If they are really serious, not only they need to speak tough but do more QT and sell MBS as well.

          Just don’t go by what FED is speaking or doing at this time, look at the impact on asset markets and other metrics on which WR is writing articles about.
          Stock market is marching towards ATH, barring a dip last year.
          Home prices are marching ATH, barring small blip last year.

  48. andy says:

    Wolf, glad to hear your better half is ok.

  49. Jcohn says:

    On July 24, my 2014 Honda Accord with 54,000 miles was hit while stopped at a stop sign .
    The car which hit me was making a left hand turn
    and was going less than 10ph .
    The accident affected only the left side of the car, the front bumper and undercarriage. The hood was slightly bent, the left front light assembly was basically obliterated and the drivers door was bent enough so that it was difficult to open . No damage was done to the radiator and the frame was not bent, but the car had to be towed away . The air bags did not deploy . I estimated that it would be around
    2,000$ in repairs . Two days later , I was told that it would take 4 weeks to fix and would cost 6,100$ . Because the other driver admitted to the police that it was her fault, her company covered my repairs and car rental costs .My car rental costs were 40$/ day for 26 days . Enterprise Rental , which provided the rental car does almost all of its business with customers whose cars were damaged in accidents .
    This occurred in North East Colorado, not in CAL or the Northeast .
    A month after the accident my insurance increased 15% .
    As an aside my daughter told me that she was going to sell her 2020 Tesla in a few years and buy a plug-in hybrid . Her reason was the lack of range on one charge .

    • William Leake says:

      Your rate went up not because you are a bad driver, but because the community in which you live increased in bad drivers, even if it is because of just this one accident.

  50. Marty Milner says:

    Try talking to a recent college graduate, with student loans, who is living independently. They won’t even see bottom for 10-15 years. There should be a level of desperation during the recession in 2025 (post election) that stuns our country. We threw them under the bus, without a second look.
    Somehow I think we could have done better. They are already baffled and flummoxed, not even seeing the correction on the horizon. I’m not sure this level of economic disconnect has ever occurred in history, except maybe in the 1930s. That sounds like a wheel bearing…?

    • Burt Reynolds Wrap says:

      I think the people who graduated in 2009 could make your story seem pretty weak. Try graduating when companies stopped all hiring for entry level positions. Even engineering majors for the first time in some schools modern history had trouble lining up a job to coincide with their graduations. Many people have to abandon the fields they put years into studying and preparing for because they had to take what was available and it destroyed their future prospects of getting back in the field. These young people these days have things stacked against them, but it is not new to the last few years. These young people, in my opinion, have it much better than the last recession. We’re not even in a recession yet. Jobs are plentiful. Pay is increasing for the types of positions entry level and young people and recent graduates fill. People who graduated in the recession are seeing people over a decade younger than them enter the work force at the same pay scale and needing to be trained by people who graduated during the great recession and had their careers destroyed by lack of opportunities. These days, if you can fog a mirror you can get a job as a young person. During the last recession, you had to pretty much destroy your dignity to land a job that was mediocre. No one is out there begging for a job like it was then.

  51. Debt-Free-Bubba says:

    Howdy Folks. If you think this is bad. The inflation thingy is just gettin started.

  52. breamrod says:

    my son in law is a ford mechanic in the Atlanta ga. area. he told me their hr. labor rate is 190 to 220 depending on time of job.Said to replace a water pump on a Ford Explorer cost — wait for it——5k!

    • Kiers says:

      just like “health insurance”? The entry of auto repair insurance as a “thing” will only jack up spot cash payment prices for auto repair work IMHO. Insurance is a bad thing for the cash payers/uninsureds, trust me we’ve seen this movie before.

    • phillip jeffreys says:

      Plenty of single owner shops out there that do quality work for a lot less than the big biz auto dealers. There are all sorts of good deals out there – one has to network with friends/communities to find the chjeaper opportunities.

  53. Nunya says:

    Just had to deal with this myself, except the insurance company DID NOT total the vehicle. I was shocked, but the 12 year old Honda Pilot with about 125k miles was repaired instead. It was a $10k repair bill, which resulted in us being out of pocket for the deductible and 20% of the rental vehicle. I’m still waiting to see whatbhaooens to my premium with a teenager that now has an accident on their record and the claims history.

  54. tom dadak says:

    My experience is the same as yours
    when I totaled my bought-used 2016 Ford Fusion last year, the insurance paid Actual Cash Value which turned out to be more than I paid 4 years prior. but to replace the car with a used car still cost me 10k more.
    the bottom line this has severally disrupted the economics of the car market.

  55. Earl says:

    I figured insurance goes up not for the reasons the insurance companies tell us (climate change and/or increased claim expenses) but rather, the effect of sustained higher interest rates for the first time in nearly 40yrs.
    Insurance companies structured their businesses to leverage free money….they borrow a lot of the “cash” they are required to have on hand for customer liability coverage, and this money is now twice as expensive so they must charge more and/or drop half their clients. They appear to be doing both.

    • Einhal says:

      Huh? This is just not the case. Insurance companies invest the premiums they get while it’s not being paid out to customers. Insurance companies are some of the largest buyers of highly rated corporate/mortgage notes and other instruments.

      For many years during the ZIRP era, insurance companies were forced to chase yield just like many other investors, as there was no reasonable return available on low-risk investments. Now they can get 5.5% on treasuries, and many insurance companies are doing so.

      They’re not borrowing money to pay out claims unless they’re very poorly capitalized.

  56. TheRealMRDyno says:

    Not all used car prices are still mental.

    I just bought a 2022 Nissan Murano S AWD with 4k miles in very nearly perfect condition for $27k, down from i think about $35k when new. It was a certified pre-owned vehicle from a Nissan dealer, so they add a 7/100 drivetrain warranty on top of the factory warranty.

    My 2013 Altima 3.5 is at 195k, no problems with it, but it seems like it will eventually need more work than I’ll want to do. 3 wheel bearings in that time, and nothing else. The CVT horror stories seem pretty over-blown.

    • Cookdoggie says:

      Thanks for the note. I have a 2013 3.5 Altima as well, 120k. The CVT is crap (shudders violently at slow speeds) but still works and everything else is fine. Hope I get your mileage eventually. It’s definitely my last Nissan. Only 3 brands left I trust: Toyota, Honda, BMW

  57. CiNi says:

    2017 Ford Focus 1.0L Ecoboost – Bought new, out the door price for $14,750. A tremendous deal then, but the Focus was end of life and massive rebates were on the hood.
    71-months after purchase and 65K miles the vehicle was totaled. Pay out was $13,500 after our $500 deductible.
    Thank you to California for requiring insurance companies to not low-ball you on pay-outs.

    CarMax was selling identical cars for ~$15K. We bought a 1yr old CPO Honda.

  58. SoCalBeachDude says:

    DM: The rise of the MEGA bankruptcy: 459 US firms have filed for bankruptcy this year – the most since 2020 – and 16 had more than $1 billion in assets

    Large-scale corporate bankruptcies are at their highest level since 2020 as elevated interest rates continue to batter businesses.

  59. SOL says:

    It’s $28 for a burger, fries and soda at Bend Burger Company. It’s like living at Disneyland.

    • OutWest says:

      SOL – you rode your bike, right? Or walked, right?

    • Reply says:

      McDonald’s has their $1-2-3 menu. For breakfast, try the Sausage McMuffin at $2.49. If you get asked if you want the one with egg, check the price – $5.19. That is one expensive egg! LOL.

      At that rate, maybe just buy two of the non-egg sandwiches instead.

      Not the ambience of the Bend Burger Company. Tastes and budgets vary. :)

  60. Depth Charge says:

    It took less than 3 years for the FED and .gov to absolutely destroy the US. In fact, it really took less than a year. The idea that a respiratory illness should be a green light to debase the currency and destroy stable prices would be laughable if it weren’t so insidious.

    Your story is something that should never, ever have happened. And it wouldn’t have happened had the US not been under control of a greedy cabal of narcissistic madmen led by Jerome Powell. What they have done and continue to do is nothing short of diabolical. The car market alone shows the evil they have unleashed.

    • OutsideTheBox says:


      Your hyperbole has become self parody.


      • Einhal says:

        It’s really not hyperbole. Is the U.S. completely destroyed? No. But it’s well on its way there.

        I can’t tell you how many people I’ve talked to say 24-42 who think the situation is hopeless.

  61. hreardon says:


    Can confirm on places like AutoNation. I purchased a vehicle out of state from them this past summer after watching the used vehicle in question sit for 6 weeks until it hit a price that was too good to pass up.

    In talking with the finance manager, he explained that they use an algorithm which automatically lowers the price on a weekly basis by a percentage, based upon in person and online interest in the vehicle in question.

    And no, they do not haggle. The number is what the number is.

    In my case, the car started at $64,000 and had dropped to $57k when I snatched it up. I follow the auto market closely and have access to weekly auction prices. The $57k number that I jumped on for this particular car was $3k under the previous week sales reports, and $12k less than new (9,000 miles for a 2023).

    • fullbellyemptymind says:

      I’ve developed systems of this type many times over the years. Nice to hear a real-world use case. Sounds like it’s working as intended, and you don’t seem disgruntled. We’ve also developed similar systems that inform dealer buying decisions (trade-ins, auction units, etc.), effectively setting a max purchase price for a trade/auction opportunity.

      Many, maybe most, of the people doing the actual buying and selling of cars these days have very little actual experience with the asset class. They only know how much they’re allowed to offer and they pocket some of the difference.

    • Einhal says:

      I like this model. I hate the haggling aspect more than anything. It makes us seem third world, where it’s normal to have to bargain at random bazaars on the side of the road.

      • Sean Shasta says:

        @Einhal: Perhaps you are an old-timer who just cannot get with the times. If you haven’t noticed, the term “third world” is outdated and has been replaced by the term “developing countries” for the last 30-40 years. We use derogatory terms and put down other countries, then wonder why “they” hate us. I guess ultimately only death cleanses and the younger generations bring in new and better perspectives.

        • Einhal says:

          Developing implies that they are developing. A lot of them are not. I’m a Western hegemonist, and I don’t apologize for it.

        • Sean Shasta says:

          @Einhal: Don’t know if you are a Western hegemonist either.

          Because you also said: “It’s really not hyperbole. Is the U.S. completely destroyed? No. But it’s well on its way there.”

          So what you are really saying is that the US is getting weaker and cannot exercise its power over other countries.

          Both the statements taken together indicate that you are just a confused, grumpy old man :)

        • Einhal says:

          The West is getting weaker because of the radical feminist agenda which has destroyed many men and uncontrolled third world immigration.

  62. Justin says:

    Maybe we are just now turning a corner. At my local Lowe’s, the price of osb (basic building material) dropped from $18 to $12 in one weekend. I’m hopeful that we have had our (mild) recession and can move forward more soberly.

  63. Imposter says:

    Just a casual observation from watching auto auctions. If a vehicle has had an air bag deployment, that seems to set the stage for the vehicle to be totalled by the insurance company and sent to auction.

    Lots of decent vehicles with relativevly minor sheet metal damage are in the “salvage title” category at auctions with an air bag deployed.

    Makes one wonder if there is some kind of hidden, significant cost factor in getting a vehicle repaired and road ready if air bags were deployed.

    Inflation, as Wolf points out, leverages those costs beyond replacement costs or at least what the insurance company is willing to offer for replacement. Not only does the public now have to pay huge insurance premiums, they also have to cough up the extra cash to get a half way decent replacement vehicle. Inflation stacked on top of inflation.

  64. Einhal says:

    The DOW is now up nearly 900 points since Friday morning, supposedly based on chatter from the Fed that conditions had tightened enough so as to not need further rate hikes.

    So in response, stocks have skyrocketed and yields have dropped significantly, undoing the supposed “tightening” that had occurred.

    It’s a bad joke.

    • Z33 says:

      CME FedWatch Tool says Fed won’t raise rates next two meetings (rest of the year). I don’t really pay attention to their predictions/guesses farther out than that. I don’t recall anytime recently other than I think ECB decision where the rates didn’t match what was expected the next meeting. So probably no hike next month…Fed doesn’t really surprise market expectations this close to decision. Dec decision I think is too early to guess personally.

      • Einhal says:

        I think that’s probably true. But again, not raising rates isn’t enough. The markets need ZIRP and QE to resume for valuations to sort of make sense.

    • William Leake says:

      The market “experts” are talking “pivot” again for the zillionth time.

  65. SoCalBeachDude says:

    DM: Pepsi sales shoot up by 6.7% to $23.45 BILLION – after firm hiked prices for seven straight quarters

    PepsiCo price hikes appear to be paying off as company nets sales of $23.45 billion in Q3.

  66. ru82 says:

    Are there cracks forming. The National Association of Home Builders, the Mortgage Bankers Association and the National Association of Realtors wrote to the Fed “to convey profound concern” about the industry.
    Top real estate and banking officials are calling on the Federal Reserve to stop raising interest rates as the industry suffers through surging housing costs and a “historic shortage” of available homes for sale.

    In a letter Monday addressed to the Fed Board of Governors and Chair Jerome Powell, the officials voiced their worries about the direction of monetary policy and the impact it is having on the beleaguered real estate market.

    The groups ask the Fed not to “contemplate further rate hikes” and not to actively sell its holdings of mortgage securities.

    • Einhal says:

      These people are despicable. They should be hanged.

      • William Leake says:

        Probably 90 percent of their former workforce are driving for Uber now.

    • jon says:

      Transaction volumes are historically low because people are imprisoned in their sb 3% mortgages.
      It basically means the jobs which facilitates these buying/selling are quite less.

      Meanwhile, home prices are touching historically high again.

  67. Depth Charge says:

    Inflation is slowly but surely eroding the standard of living of most, and eating away at the happiness of the populace. The FED has the working classes and the poor on a financial stretcher rack, pretending to be there to remove them from it while they actually tighten the screws more and more. Their intended goal is elongated limbs and structural deformities which last a lifetime, not to cure the pain which ails. Diabolical, evil people.

    • Einhal says:

      Which is exactly why the people who say that it’s better for a political to have high inflation than a recession and higher unemployment.

      It’s not. High inflation makes EVERYONE unhappy., A recession only makes the 3-4% who would have otherwise been employed unemployed unhappy.

      46’s popularity is in the toilet, and it’s because of inflation.

  68. eg says:

    My wife got tired of the unreliability and repair incidence of her 2010 Journey, so she traded it in for a low mileage 2020 Nissan Kicks. At 30K (Canadian) it’s the most either of us has ever paid for a car.

    I’m quite happy with my 2011 Chrysler 300C, though it’s a beast on gas.

  69. Laura says:

    Excellent article, the only thing I can add is that of my experience of buying a Kia Sportage 2020 with 6,800 miles . Leased vehicle return.
    I have State Farm insurance for house and vehicles. The insurance I pay for the controversial SUV above is only 477.00 per year for total coverage with a 500 deductible.
    It seems it matters a great deal where you live plus your credit score that allows for better deals with vehicle insurance.
    I live in Pennsylvania and I traveled the Turnpike , I usually don’t take it and usually take no toll roads. I used the Pa turnpike when I went to purchase the Kia Sportage.
    The turnpike has no physical toll collectors. Everything is done electronically. I have no EZ-Pass.
    I drove 1 hour on the Pa turnpike and the toll was 15.90 cents without the EZ-pass. So in total to take a 2 hour drive on this turnpike it cost me 31.80 .

  70. Spiceoflife says:

    Wolf thanks for sharing the anecdote.. though it is steeped in the cpi data for cars in your standard trustworthy data driven fashion. You keep making your site more and more of a truth telling drug I have to come back to read now that it even features anecdotes to catharse my weary mind! A bit of sarcasm and truth thanks;)

    It makes sense if skilled labor is the primary cost on many of these repairs in addition to expensive parts… that services are super sticky… and prices of these are rising. It’s why even when I make a comfortable wage as a physician I still do all my own work on my cars and most of my own work fixing my house. Maybe not the best use of time but whatever I have found that not only can I do it almost at cost or cheaper. And I get new tools each incident. Though it would probably make more working a shift… the work I do happens on time. No month long wait in the shop etc. I feel like I would delegate much more of these tasks if services weren’t so painfully expensive.

  71. MOFO says:

    My main squeeze in the Ranger Bn. was a Hispanic from Chihuahuita (El Paso). The cartels in Juarez had the place sewn-up and he used to smuggle weed into Juarez! He dressed like a Mexican narc (bomber jacket, mirrored shades etc.). He went back and forth through the Santa Fe Street crossing several times a day (business was good).

    He drove a ’60s model Chivy Malibu – no headliner, no dashboard, no backseat, no door panels just bucket seats and a spare and jack in the trunk. Made it a breeze to go through Customs except when the dope dogs got a whiff of the Pollo Loco leftovers. He paid a couple of hundred bucks for it and didn’t bother with insurance.

    Ah, the good old days…

  72. Bill Cronin says:

    Someone may have already suggested that you buy rental car insurance for situations like what you experienced. It’s pretty inexpensive, especially if your car had been repairable but necessitated being in the shop for 2 weeks. I hate to think what it would cost to replace my 2010 Toyota Corolla these days.

  73. Logan Kane says:

    Well done Wolf. This piece is really good journalism from somebody with a good understanding of the auto market! I sold my car in 2022, still haven’t bought one back, but have been traveling so haven’t needed one. Glad I could spend the money on fun stuff rather than auto insurance premiums and repairs.

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