Some of them. Buy this stuff! Overall it looks like a net subsidy to toy-loving, camera-loving nerds and a tax on commuting parents with large families.
Hat tip goes to Patrick Appel.
Which prices are falling?
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This is awesome.
Wages only outpaced the CPI by 5%? Wow. Now if only we could get the staples to go down by as much, we’d have more to spend on the items in the chart.
So basically the conclusion is that globalism has provided enough relatively low-priced distractions to the reality that we’ve sold ourselves down the river.
I preferred the 80s/90s when I could afford a home, food, and gas and buying a new computer or camera was something I did every 2-3 years.
Much, but not all, of the decrease in nominal computer pricing has been in the form of performance increases. In 1986, while a junior in college, I bought an IBM clone (8086 chip, for you older nerds) with a 20 mb hard drive, 640k of RAM and a 5.25″ 256k floppy, a high resolution amber monochrome monitor and a Star dot matrix printer with a “near letter quality” mode. That cost me $1100. I added a 2400 baud modem in the early 90s and wrote a dissertation on it complete with lots of math notation. It booted up just as fast as my modern computer and ran programs just as fast too. There were almost no graphics available, and with no internet, there was almost no networking. (Usenet and gopher). My grad school stipend around that time was $10k per year for comparison.
According to the CPI from 1997 to 2007 the average price of a new car fell 5.5%.
But over the same period the average transaction price rose from $19,531 to $23,338. This 19.5% increase is what the average new car or light truck buyer had to actually pay.
But the BLS is saying that the average quality of new cars rose 24% (19.5 + 5.5).
This really gets to be an interesting exercise in the entire issue of how you treat quality adjustments in calculating inflation and real standards of living.
Gary, it’s because the “discretionary” items are not very regulated by the government, whereas the government feels the need to regulate the availability and price of staples like food, fuel, etc.
I think it’s hard to make the distinction in reality between price changes of staples versus discretionary items. Heck, I think it’s even hard to track the price of a single item. What amazes me when I’m in the grocery store is the huge differential in price even on single items.
The generic can of green beans is essentially the same thing as the name brands. I think you’d frequently have a hard time telling them apart in a blind taste test. Yet, the name brands are frequently more than double the price. So, what is the inflation rate of green beans? The stated rate might be high, but I can go to the store & buy some pretty cheap green beans. In the same store there must be a half dozen ways to buy cola. (In a case, in a can at the checkout, at the fountain, from a vending machine at the front door, etc.) Depending on the delivery method I choose, the price can range from around 10 cents/oz. to 90 cents/oz. This is the same product, in the same store. I think the inflation rate is basically untrackable on a lot of these items where price sensitivity has become so low.
“Firstly, these falling prices are a technological process and inflation is a monetary phenomenon.”
If you’re measuring inflation through price levels, how do you distinguish between technological & monetary phenomena? It seems to me that the thousands of influences on the price of even one product would be impossible to catalog.
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