Companies can’t pass on those higher prices? What a bummer. But if they can without losing sales, it’s off to the races. See 2021/2022.
By Wolf Richter for WOLF STREET.
Nearly every subindex of today’s ISM Services PMI grew in February, and many accelerated further from the January pace of growth. Among those that accelerated further: The overall Services PMI and the indexes for employment, new orders, and prices.
And so, the services economy, which dominates the US economy, grew in February at a decent clip, according to the report.
The index that declined at an accelerating pace were imports. And that would be a good thing. Rising imports are a drag on GDP, and imports spiked in December and January in a historic way, according to Census Bureau data, as companies tried to front-run any tariffs to then charge higher prices amid tariff chaos for stuff they hadn’t paid any tariffs on? The profit motive at work.
But prices oh-la-la, with 16 of the 18 services industries reporting an increase in prices paid in February from January. The Prices Index, at 62.6%, was an acceleration of 2.2 percentage points from January, and the third month in a row – December, January, February – above 60, the first time that this occurred since March 2023.
The way these Purchasing Manager Indexes (PMIs) are structured, a value of 50 means no change, a value higher than 50 means growth, and a value below 50 means decline. The higher the value above 50, the faster the growth. The measurement is month-to-month.
In February, 32.4% of the respondents reported price increases from January, while 63% reported no price changes, and 4.6% reporting lower prices.
Here are the past four months. You can see the progression of the acceleration from November through February of those saying they paid higher prices:
| Prices paid | % Higher | % Same | % Lower | Index |
| Feb/2025 | 32.4 | 63.0 | 4.6 | 62.6 |
| Jan/2025 | 25.0 | 71.9 | 3.1 | 60.4 |
| Dec/2024 | 23.7 | 73.4 | 2.9 | 64.4 |
| Nov/2024 | 19.3 | 75.1 | 5.6 | 58.5 |
And note: these are prices the companies paid, not prices they charged. Whether or not they can pass on those higher prices-paid is another story that we’ll get to in a moment.
But, but, but… the tariffs haven’t been implemented yet.
the new tariffs that are being bandied about, rescinded, paused, or renegotiated haven’t been implemented yet. And tariffs don’t apply to services at all, just imported goods if and when they’re finally implemented.
In the December Services PMI, which tracked prices changes from November, the Prices Index accelerated majestically to 64.4%, but Trump wasn’t even President yet.
So you can see what’s going on here: Companies love to raise prices, if they can without losing revenues, and now they feel they can. They feel emboldened to raise prices – which is precisely what triggered the 2021-2022 surge of inflation. Is this now the beginning of the second wave, and this time they’re blaming the still non-existent new tariffs?
Those prices will stick if businesses and consumers are willing to pay them. The chaos around the tariff threats, the media’s tariff clickbait that then goes viral, and corporate fearmongering on tariffs may be accomplishing this feat of getting businesses and consumers to accept higher prices and pay them willingly, thereby nurturing the second wave of inflation into existence.
Can’t pass on those higher prices? What a bummer.
Another US Services PMI released today, this one by S&P Global – which painted a “gloomier picture,” according to itself – also chimed in on rising prices, but added a different and more hopeful angle, that companies weren’t yet able to pass on most of those price increases and thereby ended up eating them:
“Cost inflation also picked up in February as suppliers raised prices, although competitive pressures meant that service providers increased their own charges only modestly.”
“A broad range of goods and services were reported to have risen in price during February, with suppliers in some cases increasing their charges due to [the not-implemented new] tariffs.
“Labor expenses were also reported to have increased.
“Overall, input cost inflation picked up in February to its highest level for four months and further above its long-term trend.
“However, efforts to pass on higher input costs to clients were somewhat limited by competitive pressures, weak market demand and market oversupply. This meant that prices charged rose only modestly overall in February.”
The report then commented further:
“Adding to the gloomier picture in February was a sharp rise in costs, which companies were often unable to pass on to customers due to weak demand. While this reduced pricing power is good news for inflation, it’s potentially bad news for profitability.”
What a bummer.
In search of “pricing power,” the holy grail in business.
Companies love to raise prices and try to do it all the time to see if they can without losing sales. Raising prices pushes up revenues if unit-sales don’t fall as a result of those higher prices. And if a company can raise its prices faster than its costs rise, its profit margins get fatter on top of the revenue increases. Wall Street is ecstatic about this stuff.
This “pricing power” is the holy grail in business. But what keeps companies from raising prices is competition that might not raise prices, so the price-raiser loses sales to that competition. Or customers sometimes refuse to buy and just don’t buy at all, not even from competition, and do without, when particular prices rise.
But in 2021 and 2022, companies suddenly could raise their prices without losing sales, and they were coordinating their price increases in public for all to see – because the media loves to turn this stuff into clickbait – by announcing their price increases so that their competitors could fall in line, and they did, which is why there was this spike of inflation in 2021 and 2022, accompanied by a huge surge in profits and profit margins. And now they again believe they can, and this coordination in public about higher prices has started all over again, and the media is turning it into clickbait all over again.
And they cite the tariffs. But the tariffs that are being talked about, rescinded, paused, and renegotiated haven’t been implemented yet. And tariffs don’t apply to services.
And yet, the common logic being used to explain to their customers why prices have been raised, companies blame the still not-implemented tariffs. It doesn’t matter what they blame. The idea is to raise prices and get away with it without losing sales. And they’re trying, and if their customers let them get away with it, this will turn into the second wave of inflation, even especially in services, which are never tariffed.
Fits right into what we’ve been seeing in the consumer price inflation data: Inflation has been going in the wrong direction for months, long before the tariff chaos even started. Read: Beneath the Skin of CPI Inflation: Worst Month-to-Month Acceleration of CPI since Aug 2023, on Spikes in Used Vehicles, Non-Housing Services, Food, Energy
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You sound like the Austrian economists: “Austrian-school theorists hold that economic theory should be exclusively derived from basic principles of human action.”
quoting Wikipedia: The Austrian school theorizes that the subjective choices of individuals including individual knowledge, time, expectation and other subjective factors cause all economic phenomena.
IF the Fed did not have 100% Keynesians, we would not have our present economic mess and the prophesy that our little green pieces of paper are going the way of the Reichmark after WW 1.
That’s pure B.S. Take Welles Wilders Delta Theory.
How much purchasing power has the dollar lost since 1913?
Bob, almost all of it!
Here’s the ”OFFICIAL’ report of the degradation of the USD due to the ”FED” protecting the gangster ”banksters” during the period 1913 to recently:
https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=10.00&year1=191305&year2=202501
Keep in mind, this is the ”official” report…
It might almost be worth a 2nd round of inflation to watch Trump tap dance his way through it. 😂😂😂
Very crude of you. To wish evil on anyone.
The President is addressing a ticking time bomb. If we don’t bring government spending under control and stop corruption and wasteful spending as well as the flow of illegal aliens including hundreds of thousands of criminals, fentanyl, human trafficking, trade deficits, etc. we will soon face a much greater problem than short term inflation. We have a real and rising national security issue. We need to bring business back to America and create greater competition by getting rid ridiculous regulations that impede competition and promote domestic manufacturing. Tariffs may very well raise inflation in the near term but strengthening our economy will strengthen the nation and ensure economic survival and prosperity for the future. Other nations put their interests first. It is about time that America does so before it is too late.
Wow! Sound like somebody drank their Trump Kool aid today
Thank you.
My thoughts exactly.
How much fentanyl came through the Canadian border last year? Go ahead and check it out, I will wait…
You’re spewing a bunch of hooey, the question is whether or not you know it.
Yikes. Please don’t spread the brain rot here. Few of the things you mentioned were a problem before the Trump show used them for political purposes. Why bother reading this great site if clearly facts are not a priority for you. I would suggest renting the movie Idiocracy and pretending it’s a documentary. You will feel right at home.
If this administration was really concerned about reducing the deficit or the national debt, they would not be slashing revenues. It’s all “supercazzola”.
LOL. You seriously think they care about that? It was a ruse to get the rubes to vote against their interests. And it worked again.
There are lots of bobblehead voters out there who will eat it up and believe it when it’s spoonfed to them by big corporate media.
This is going to be the roaring 20s all over again, ending in a collapse and then gangster capitalism coming in to mop up the leftovers at fire sale prices. Average Joes and Janes won’t know what hit them.
Look at 2016-2020. The guy in the white house claimed over and over it was INFRASTRUCTURE WEEK! Never happened.
Then he was going to bring back manufacturing! Never happened until Biden got in and did the hard work with the CHIPS and IRA acts and other things that got the ball rolling. Added a lot more than his predecessor even tried to, yet the media ignored it and blamed the pandemic based inflation on the one who was actually fighting to tame it.
What’s going on is the return of the robber barons. They’re trying to dismantle government to convince people that it doesn’t work, while preying on their fears and bigotry. They’re not even trying to hide it anymore.
Then when things collapse, the oligarchs will come in and privatize the functions they destroyed that people who voted for them finally realize are needed. But you’ll pay much more for it this time around. It’s happened/happening with medical care, the felon’s buddies are in line to take over the weather service for their profit, the postal service is being teed up to privatize, social security and medicare/medicaid, and VA services are in the cross hairs to be cut, and the list goes on.
Big business may be efficient at trying to avoid regulations, but they’re also effective at reaming you when they take control and do their best to limit competition.
Look at Hungary and Russia to see how this works. Those are their models.
Right, so if all that’s true, i’m sure the budget won’t include trillions of dollars in tax cuts for the ultra-wealthy and corporations. And if it does contain those tax cuts, I’m sure you’ll come right out and admit that you’ve been being lied to all along, right?
Ben, you know those tax cuts will pay for themselves with growth, right? /s
The #1 indicator that someone doesn’t know what they’re talking about: “Other nations put their interests first. It is about time that America does so”
LOL. EVERYTHING America does is to promote its interests. There’s a good reason a whole bunch of the world hates us.
Another laugher: “We need to bring business back to America ”
True! Since America’s GDP is only the world’s largest, ya, we just don’t have any business here.
You seriously believe the government can raise an extra $2 trillion of tax revenue per year without causing a depression?
This guy’s an idiot. Glad everyone smacked him down.
I for one whole heartedly support President Trump’s plan to bring fentanyl production back to the United States. This will provide much needed jobs to our beleaguered kitchen chemists.
Interesting how it’s never an issue with lack of revenue coming in- it must always be big government waste.
My concern is the US is painting itself into a corner. Its main features will be access to capital, the dollar being the preferred currency and favorable tax rates for people who make a lot of money (and corporations that make a lot of money).
Bottom line, is the US returning to the late-1800s Gilded Age? Sure seems that way at the moment.
In fairness, he is definitely right about Federal spending, not that the current leader helped with that last time. Entitlement spending will have to be confronted, and those of you saying “it’s a revenue problem” will end up sharing more of YOUR revenue to prop it up, the wealthy will always always always find ways around it, they always have.
I love the America First agenda. You know who doesn’t want to make America great again? Communists…
Putin is quietly chuckling at his victory.
How exactly is increasing the debt by $4.5 Trillion to give tax cuts to billionaires “Bringing Spending Under Control”???
What they’re doing is like going on a diet and not eating that one cookie, then eating all the ice cream in the grocery store.
Georgy Porgey,
I don’t need to add much as everyone who replied to you should bring on the light bulb, um maybe not.
Everything he is doing is NOISE, keeping his lemmings shouting yeah! whilst distracting the rest of the people as least so he thinketh.
Look at what he is doing to the great institutions that were created over centuries by the fore fathers, the ones to protect Liberty, Democracy and Freedom.
Yep, if you have anything between those ears you will see what I mean.
He is coming for you and yours, make no mistake.
The key mistake in all this is the use of the word “we”. There is no, “we the people” there are bankers and finance and corporate owners and they run the country and always have. They debate how much free trade or tariffs, how many immigrants to let in the country and when to wage war with bullets and when to do it with sanctions. Regular people are not part of their calculations other than to get your vote and your $
George,
As I said before there were 60 Tea Party-affiliated candidates elected to the House in 2010 and 5 Tea Party-affiliated candidates that went into the Senate the same year. The largest numbers ever to get into Congress waving the same gang bandana. Besides their unanimous dislike of Obama, the square they swore to stand on was to reign in government spending. What happened? DC swamp creatures swallowed them whole one by one, spit out the bones and eliminated them thru Republican primaries. They had a bonfire and burned all 65 of their bandanas and deleted the Tea party caucus from existence. Their failure is what has got us to this point.
DoD spent $150billion on research out of the last $850billion they received. How much waste is in there? GOP with that yellow strip down their backs refuse to stand up to the M.I.C. so they chose to take from the working class and poor by stripping $880 billion from Medicaid. 35% of all births in USA today represents a child covered by Medicaid. This will guarantee the deaths of countless children and helpless adults in this nation. It’s bigger than business and tariffs, it’s already too late as the fiscally responsible GOP politicians have all been eradicated
Oldguy: better koolaid than the acid being ladled out by Trump’s predecessors!
If you have some discretionary income, there are paddle discounts currently available.
Trump has taken some high risk steps. A more propitious path might be assessing how tariffs/reciprocal strategy fairs against individual nations but might create instability when applied globally. Haven’t seen much theoretical or empirical analysis on that.
I’m sure once the tariffs are lifted, if they are ever imposed, or when they are raised even higher for retaliation, then lifted, then prices will come down. So it’s best to start raising prices now, just in case.
/s
BP – not so ‘/s’, actually. Many businesses remember Nixon’s wage&price controls, which subsequently fostered the ‘MSRP'(which few ever really pay)-kabuki acting as a hedge if such an event ever reoccurs…
may we all find a better day.
One can only hope we return to 5% + 28 day T Bills
Although i did add a 6 week tranche at a slightly higher than 28 day yield…
Those who locked in 4.8% for 3 years are looking positively prescient…. At least for the time being!
I have a CD at 5% into 2027. I also have one at 1.9% thru 2031. Regrets, I have a few….
kdogg
1.9%? I’m not sure I would have even revealed that tidbit, I bet the people at that bank laugh their butts off everytime they access that 2031 file. Didn’t cover your inflation loss for even one calendar year as the Fed openly admits it seeks 2% inflation. Wow
Running after nickel returns in front of an out of control steamroller doesn’t seem like the smartest move.
I consider T Bills as safety above all else. I consider nvda “investors” as running after nickels. Heck, I still run across folks wanting to flip houses every week. It usually takes me about an hour of two to either talk them off the greed ledge or they walk out of my shop with a sour look on their faces. Gonna be the roaring 20’s?…. We’ve been in it since Clinton at least.
This!
Mr. Wolf’s question: “Is This the Beginning of the Second Wave of Inflation?”
Answer: Yes. Information source having lived through the 1970s and 1980s; wave after wave of roller coaster inflation always elevated at evenvthe lower spots and yes it gets worse.
Wisdom: Old age wisdom is seeing the same thing again, while the pundits for the self serving economic interests say this time is different. However, those same self serving interests are completely transparent as the facts don’t match their words. Sort of like watching a foreign news broadcast about their local country.
Old age is learning that everything taught about society and the economy was wrong. It takes a whole lifetime to unlearn that nonsense learned as a child.
I graduated college in 2005 with a degree in finance. I remember getting into the real world and working my first job at a major and thinking this isn’t what I learned! Nothing they were doing at that time made any sense. I’ve learned more through reading Wolf’s articles. Thanks Wolf!
Same here but 09 grad.
Always cracks me up remembering the business professors who worshipped at the altar of Jack Welch. Those lessons didn’t age well.
I graduated business school a bit before 09 when both business schools and my first employer were die-hard groupies in the cult of Jack Welch. I struggle now to think of anyone in the business world who did more long term damage, especially if you include his malignant spawn.
A great philosopher once said – Free your mind and your ass will follow
George Clinton + Funkedelic circa. 1970
…ah, The Firesign Theater’s classic album title from the Aquarian Age back in the 20th Century (‘Everything You Know is Wrong’)…
may we all find a better day.
Wolf has already noted that the uptick in inflation started last year.
Smart observations. Reminds me of the way Fed rate changes were always “baked in” several months in advance by corporations and stocks. For some mysterious reason the “baking” always worked in the direction that would raise profits and shares, and it never “unbaked” if the predictions turned out wrong.
Inflation, inflation, more inflation…just what our “drunken sailors” need right now. $20/gallon gasoline and $10 beers (at the pub)
Of course, this is ON TOP of home prices that have gone ballistic, home and auto insurance that has skyrocketed, out of control medical costs, increased food prices. exorbitant auto prices. What have I missed?
Yeah, just what my psychiatrist ordered for my paranoid schizophrenia, bipolar, anti social disorder – more inflation! Yippee!! ☹️😡🤪
I thought right away of the drunken sailors, their recent party phase, and their fortunes now. I guess no edge in this modern world goes unpunished, or perhaps, one way or another, untaxed. Inflation is the modern taxation, in this era of perhaps needful indirection toward the self-deluding voting public. My default setting is “hunkered down,” and this has served me through many decades. I know this is not for everyone, but I have loved many a serene night’s sleep, and countless days with some beautiful openness and optionality (if the low-cost kind) in them. And, with a few nervous glances toward the edges of the probability distribution, this season is no exception.
I’m paying $6 for beer on tap at local clubs.
Agree wholeheartedly with you on insurance industry equivalent of usury.
Companies always try to front run price increases. I think in one form or another these tariffs are going to be implemented. Whether they stick or not is another thing. Unfortunately once companies raise prices they rarely reduce them. If these prices can’t be passed through to the customer then I would think that signals the early stages of a recession. The choice seems to be between inflation and recession with these current economic policies.
Tariffs best use case is to protect domestic industries. The current application may lead to currency wars and if the US ends up on the wrong side of this it could be the beginning of the end for the US dollar being the global reserve currency.
“The choice seems to be between inflation and recession with these current economic policies.”
Once inflation becomes sticky, I think this is usually the only two options regardless of policies.
the 25% Nafta tariffs are already off and running since tuesday. supposidly a automotive carveout has been made but nothing published yet by CBP
Its amazing that inflation and borrowing costs drive so much of the system.
The announced re-armament of Europe, which will enable all the EU politicians to say oh we have to because they are so desperate to borrow and spend more, has -already- put another 3bn on the UK’s debt servicing costs (or around 0.1% GDP it will be the same for the USA proportionately I guess). The EU is proposing to compete to take almost a trillion of debt.
Although I think Trump is taking the best course with tariffs, and I guess he hopes that reducing government costs will give him leeway to moderate the ensuing inflation, its hard to see how a hard bout of inflation is going to be avoided.
I was in the supermarket the other day listening to the cashier talking to a friend about fish and chips, she was saying that they used to be a cheap staple now so expensive, I wanted to say because GBP has lost half its value since 2010, but as its her private pension gone I just held my tongue.
One day inflation will go too far really, listening to the cashier who was still at the stage that goods were becoming more expensive reminded me of the 1929 shoe shiner giving out stock tips.
…ongoing reduction of global fish stocks (not stonks), have no effect on supply/demand pricing, however…(/s).
may we all find a better day.
Perhaps last year’s rate cuts are the culprit? Rate changes operate with a policy lag, which would explain them kicking in over the next several months in the form of higher inflation.
In the bond market, lately, the winner in the battle between possible inflation and possible recession is clearly being won by possible recession. It looks like it reversed around January 20, 2025. I am sorry to see long-term bond interest rates being governed by the stock market, but it appears to be what is happening. Interesting times, so to speak.
are long-term bond rates being governed by the stock market, or are they both responding to the same thing?
What unexpected event did the market learn about on January 20?
I doubt anything unexpected happened unless the market was in a coma for 3 months
“In the bond market, lately, the winner in the battle between possible inflation and possible recession is clearly being won by possible recession.”
Maybe in the short term. In the long term(say 5 years back) the trend towards higher TNX yields looks like it’s on solid footing to me.
10-year yield has risen for the second day in a row, by 12 basis points total. If you look at a 3-year chart, the 60 basis point decline from the Jan 5 high through Mar 3 low was a lot smaller than the prior two major declines (starting Oct 2023 and April 2024), each over 100-plus basis points.
Hussman has a chart of the 10y bond yield and what it does after the start of a recession. Contrary to popular belief, yields do not drop until after the 16th month. and if the inverse relationship between EFFR and yields holds true and they drop short rates, bond yields may actually rise. Payback for decades of financial repression
I haven’t seen the specific chart you reference, but I keep a 10 year vs. core CPI chart on my desktop. Not only do yields not drop in an orderly fashion after a bout of inflation, they generally exceed peak core CPI at some point down the road. Typically in a 15-25 month lag, close to your reference.
This ain’t even halftime boys and girls, there’s a long way to go.
“Men [including bond buyers], it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”
— Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay
Mindsets take time to get whipped into submission by new circumstances…
Apr 24 was still “the Fed must cut!” mania…
It appears the recent drop was Trump related…
Now the channel is back turned back to Inflation?
I’m patient. Since 1970 the FED has had to raise rates in the face of inflation at least three times after pausing or lowering slightly prior to…. ’73-’74, ’80-’81 and ’95-’99/’00. So, there is precedent. Maybe there will be a significant recession forcing the FED to lower? The great thing about T-Bills is that I sleep well while the FED pays off my mortgage. This harvest season has been wonderful…cruising around the property picking citrus for my Kuvings juicer, grazing on various other offerings and now watching the Spring flowering for the avocados. Finally La Nina is past and the farm is back on track. Standing between the branches of a flowering avocado tree in the morning with its overpowering fragrance and the honey bees just mobbing it…one of life’s memorable moments.
I can live with 4.3%. I might not like what a 7% T-Bill world looks like…
If you were serious about juicing you would have brought a Zummo.
Nah, it’s just transitory….caveat is that the transitory timeline is open for interpretation. Just like Dinosaurs was also transitory in history and same as human species down the road.
At least the dinos didn’t kill themselves off. It takes much more intel to create your own extinction event.
Kelly,
According to your doctrine Mother Earth is the celestial Einstein as she has already implemented 5 extinction events that we know of. She likes cleaning house every now and then. It remains to be seen if being too smart for our own good will ultimately be the end of the homosapiens or if she will initiate the deletion of the dominant vertebrates, once again.
Prometheus captured the sun and Icarus flew too near the sun.
The H-Bomb, using a fusion of hydrogen into helium, duplicates the solar process creating a small star on the earth’s surface. A small atomic (fission) explosion is the blasting cap to initiate the fusion event. The first test yielded ten times the predicted blast.
So far the H bomb is the only weapon never used. There are a few thousand. Do we feel lucky?
Well,I have thru the years as I got older learned to live with less stuff,of course,have accumulated all the tools/hunting& fishing gear ect. I need for a lifetime(hopefully!).
I while not cheap am frugal,always looking for a deal and also learning to live now with less,that said,I do need something always go for quality over price.
I still eat well but have learned how to make nice meals with less monies,really not feeling deprived at all and am actually grateful.
We think and like alike.
Good to know someone like me out there 🙂
Yes, yes it is. It’s our springtime of 1979…
Hedge accordingly.
I want to hold a TRANS rally in my town – which would advocate for the underprivileged TRANSitory inflation I want this savage persistent inflation to go away! Back with the TRANNY!
Profit margins increased from 12% pre-pandemic to 18% now.
I don’t expect it to stop. There are lots of way to disguise price increases (shrink-flation, lower quality, etc.)
https://wolfstreet.com/2024/09/26/corporate-pricing-power-and-therefore-inflation-not-vanquished-says-renewed-spike-in-corporate-profits-in-most-industries/
Amazing chart(s), Wolf. I don’t remember seeing those in Sept. Thanks for re-posting.
Even subtracting 30% for inflation, the non-financial is a giant boost. This changes my (previous) skepticism that businesses were just jacking up prices rather than passing on rising input costs. This also explains at least some of the equities rally since (obviously along with multiple expansion).
I wish there was more discussion about the psychology of inflation. I often think about how cultural and social factors influenced the inflation of the 70s. The “keeping up with the Joneses” mentality. It’s not just oil prices and supply chain issues that influence prices, it’s much more rooted in greed, fear, despair etc. And I really need a new car now that I’m thinking about it
Get the new car before the prices go up!
Well I did meet someone who recently paid over $100k for a beautiful Chevy Silverado pickup. (I was wondering how many people would pay up like that?!) Unfortunately he’s complaining about the $1600+ a month truck payment that he has for the next 8 years. He was using it to earn some extra cash driving for Uber. Let’s see how many consumers step up and and do something similar. Just not me.
wait till you hear what people paid for houses and how big their payments are. And they can’t even drive their house to Starbucks.
What’s the average monthly payment on a Starbucks latte?
Someone who buys a 100k car but has a payment is just poor working paycheck to paycheck.
100K is a merely a nicely equipped SUV these days. I’ve been looking for new/ lightly used car since my left me stranded one too many times, but prices out there feel like I am shopping for a 1bd condo.
He needs to go into treatment
wow. that is financially ruinous. He must feel extremely safe in his job.
I too, noted these insanely expensive, just-off-the-lot pickups, some of which are driven by contractors coming by to do a little house maintenance that I can’t do myself. Makes me very nervous about what they propose to charge me given the monthly payments. But, I was told by one contractor that his shiny new truck, (not at all necessary for the kind of work he does), was a great tax write-off. OK, if he’s got a good accountant; not OK for me if he doesn’t.
he’s right. trucks over 6,000 pounds used for business can be expensed, rather than capitalized.
lol. he’s probably going to lose money per ride when you figure in depreciation on that beast.
But but but, the media said that inflation is caused by greedy companies raising their prices to oppress poor people! /s
“correlation does not imply causation”
What you say about pricing power is spot on.
Inability to set a profitable price due to fierce competition takes all the fun out of being in business.
Competition is a good thing when you’re finding ways to reduce the quantity of labor in a product. Creativity, dedication, and hard work wins.
Fighting to reduce the price of labor stinks. When you’re outgunned by cheap labor, it’s demoralizing.
Rg62 – always appreciate your frontline posts. Trying to make a business run cleanly on a never-level playing field is a stone b***h.
may we all find a better day.
Before I retired, I would work and negotiate with companies in determining their rates. In particular we worked on their risks and the costs of those risks and how it would factor into their mark-ups and labor rates. I don’t think the fact that the tariffs are not in place matters; it’s the fact that they might exist that drives up the risks and the rates. Both currency risks and the risks of un-recoverable costs factor into the equation. The longer the contract term, the higher the risk to the supplier. Walmart and Costco have both 1 year and multi-year contracts with suppliers. In order not to sell at a loss when there is a long period before price re-negotiations, these suppliers have to up their costs based on the possible risks which can result in significant price increases depending on the volatility. Labor rates for services have forecasted increases based on the appropriate tables which reflect fair increases for increased costs of living. On top of that, some large companies have predatory “fines” on suppliers who have a label 1 inch out of place for example, which are almost always automatically deducted from their invoice – in order not to sell at a loss, these companies up their prices to break-even after the “fines”. So the inflationary costs can happen before the tariffs take place if there is a threat/risk that they may take place. That’s why well-respected long-term trade agreements result in lower consumer prices I believe.
The Fed has to decide whether to fight
inflation or just tread water. My guess is they will be forced to raise rates when inflation officially hits 5%. Just in time
to be a factor in the midterm elections.
We have never in history needed a massive recession so badly. We need a meltdown in speculative non-assets like crypto. We need sanity to return.
“We have to destroy the village in order to save it”
quote from the commander of the 6th Air Force wing in NAM, 1968.
When covid started, and the health professionals were paranoid as hell, I went to my local care center (clinic) to get some blood drawn. I asked the receptionist what are they doing about sick people. She said, and I quote, “We are not seeing sick people.”
When it does happen, it will be ferocious. There is an entire generation that has been conditioned to buy the dip. It’s been more than a decade since any idiot could find a job anywhere doing almost anything. This is not natural. It will not end well.
It’s almost entirely permabulls with a “btfd” mentality who produce absolutely nothing. Hard work is not rewarded anymore, while speculators are rewarded handsomely. Jerome Powell and the FED are disgusting people for what they’ve created.
After patriotically changing the name of the Gulf of Mexico to the Gulf of America, upon further consideration President Trump has decided it would only be appropriate to rename the United States of America the Inflation States of America.
Inflation suddenly matters
…an outrageous carve out to benefit the map, atlas, and globe manufacturers (y’all are rushing out to replace your obsolete ones, yes? Oh, wait-fergot that those aren’t considered essential here in ‘Murica…).
may we all find a better day.
If you look at the chart in the article, most years have a trend upward in Q4 which lead into Q1, and slightly Q2 of the next year before trending down, i.e. cyclical. This recent pattern looks fairly normal. Waiting to see 6-12 more months would provide relevance.
I was cursing at Home Depot the other day when insulation had gone up ~$5 since the week before. I immediately knew they were just using the tariff excuse. I love to hear Wolf agree with my thoughts.
At least I had a coupon, and I needed that insulation before I could put my attic floor back down. But, in general, I am just going to do my silent little protest of barely spending any money this year. Everything seems overwhelming miserable anyway. No amount of stuff is really going to elevate my mood.
It’s pass along the tariffs or die for a lot of businesses. Right now it’s just a bunch of waiting to see how the tariff situation is going to play out. And waiting means not growing, not investing, loading up on imports before more tariffs drop. It’s going to be bad for GDP. Congress needs to reclaim tariff authority.
Congress? What a joke. They are just the cheerleaders for their team’s quarterback. Maybe it’s time to read what Roger Sherman said in 1787 about the tyranny of the Executive.
Or George Washington’s farewell address to the nation.
“How I made $30,000,00 in 6 years!”
…memoir of a Congress Critter
Right, it should actually be under congress. The whole fentanyl ruse was to move that power under the exec branch.
You should read up on the well thought out approach Wolf has written about regarding tariffs rather than running around screaming at the sun. That goes for many here
I have read Wolf’s thoughts on tariffs. They’re a tax. Maybe you should reread Wolf’s thoughts so you can add something to the conversation.
I see no stopping:
https://fred.stlouisfed.org/series/TOTBKCR
Bank credit increasing.
I like this one:
https://fred.stlouisfed.org/series/DPSACBW027SBOG
Bank deposits are below what they were three years ago. I am not surprised. Anybody with at least half a brain and some money is buying Treasury Bills. I know I am. I have much less money in banks than I had three years ago, and hope to have almost none by November 2025. Just a small amount of money for checks and auto bill pay.
Service inflation may get a break with AI coming online.
AI came to the rescue for me when my washing machine went out. I called the Sears appliance service number on my bargain appliance service contract that I pay $59.85/month, and a polite call center lady answered from Hondurus and sent the service call to an automated dispatcher. The tech was contacted and apparently went to his AI computer and used the symptoms reported (no spin cycle) to find the repair part (motor coupler) and have it in hand when he came over to fix the machine. It was done in 30 minutes. No humans were involved except the lady in Hondurus who took the initial service call and the tech who came over to install the part. Looks like AI will be eliminating many service industry jobs that are now no longer needed as computer server farms, AI software will replace humans. As an AI skeptic, I am encouraged by this development.
This was the first experience I’ve had with AI actually doing something that benefited me. I’d like to see more.
while i’m glad this worked out for you, i’m not really seeing how this is ai. software to diagnose problems has existed for many years. i suspect your service contract provider calls it ai because ai is in vogue.
That’s called “googling the problem” and isn’t AI or a new thing.
Anybody that finds acceptable the amount of money our government spends every year, and much of what it’s spent on, needs their head checked or is employed by said gov’t. Half of America, or so, doesn’t even pay a fed income tax and many get a check at the end of the year as well. I’m tired of hearing about the rich and their fair share. What’s fair? They’re footing the bill as it is. Penalized for kickin’ ass. Pfft! So easy to spend other people’s money and it shows. For many reasons it’s every Americans duty to pay as little as legally possible in taxes. THAT’S the American way. Those that feel differently go here. 24-7.donations-accepted.gov (Not a site)
Len – …and you’re totally-prepared and willing to write that check against the value of your life when called to actually soldier, yes?
may we all find a better day.
Agree. Too many blinded by hate in these comments. Clear, concise, facts, not ideology. On either side!