January Inflation

[JAG]

Article is an example of the derivative effects of acting like an a-hole to friends with tariffs. It is important to keep in mind that over 1/4 of th exports in trade balance is made up of services and over 50% of the Tech sectors revenue is from outside US.

Trump’s Aggression Sours Europe on US Cloud Giants

Companies in the EU are starting to look for ways to ditch Amazon, Google, and Microsoft cloud services amid fears of rising security risks from the US. But cutting ties won’t be easy.

www.wired.com

I agree and I’d hate to have to deal with him face to face or country to country. However, I think he expects this kind of retaliation and is smug about it. I think he expects to lose some us business and expects the other side to vilify him. The republicans vilified Biden and blame him - the see saw of politics like Newberg said is like a WWF match; they make a lot of drama and nothing real ever gets done.

For the sake of perspective, he has compelled the EU to stop discounting payments to NATO based on an agreed percentage of their GDP and to give more support to Ukraine in their fight against a common enemy.

The EU is giving him the bird and complying to pay their agreed on/fair share. I don’t think he minds the reaction; in fact, I think he is smug about it since their anger and compliance is sufficient confirmation. Is this better than losing a few businesses to Europe? Time will tell but that article is certainly unsettling.

His stated goal to balance trade is easier to toss around when you have a ‘trade deficit’. Is simple and easy to believe as it is to disbelieve.

To your earlier point, context matters and I agree that one must be careful because we do have the highest wages. None of us want the China jobs that pay peanuts and yes we built it this way on purpose. Since technology has advanced well beyond that phase, I think I can see the reason he wants to at least tweak the deficit.

In my state and just a handful of others, there’s been a growing interest in trade school models that have a mix of competitive academics with real-world, on-the-job-training of a specialized vocation. Such as mechatronics, welding, aviation mechanics, cybersecurity, construction management, … This emerging new model is not common; only about 30 schools like it exist in our country.

I’m aware of it since one like it was recently built in our county. It’s a public trade school built with zero state funding, county tax dollars and 50% of funds from private investors counting on them to provide their labor force.

New high school grads from trade schools earn a starting average pay of $67,000 and are college ready if it interests them. This relatively recent trend started before Trump, but I suspect his supporters want him to mess with the trade balance to shift more advanced manufacturing opportunities on US soil.

I did a quick search on this: With an average ‘starting salary/per tuition+board’ dollar of a:
1) trade-school HS grad: $67K/free,
it obliterates the average ROI of four year college grad:
$57K/$39,000 minimum (avg tuition +room/board per Experian)

 

[Rie Bread]

 

[JAG]

You appear to be relinquishing responsibility for your thoughts and your actions. You appear to believe in and trust in trump. Everyone can see these disastrous decisions but they think that he is clever and understands this situation more than you do so you relinquish the decision making and critical thinking to whatever the lunatics' are saying on either side. Giving over that type of faith should perhaps be left in the church.

Many refuse to believe what they repeatedly hear and what they see for themselves; as this fella has folks infested with ideas that everyone but him is lying to you. We have lost critical thinking skills.

Someone said if it walks like a duck, quacks like a duck - it may be a freaking duck. Humans are fallible by nature and this one has shown you over and over again that he wouldn't qualify to have your jobs let alone the one that was given to him.

However, Let's assume that the U.S. imports $474 Billion dollars worth of automotive products and $220 billion in cars. (I believe that was actually more like $235B but let's go with the Reuters article).

https://www.reuters.com/world/us/trump-ratcheting-up-trade-war-presses-ahead-with-auto-tariffs-2025-03-26/#:~:text=The%20U.S.%20imported%20%24474%20billion,passenger%20cars%20worth%20%24220%20billion.

A 25% tariff would raise that number to about $275B or an addition of $55 billons' dollars per year. The simple person would say well, move your factory to the US and start building cars to save on tariffs.

The automotive industry would take a minimum of 2-3 years to build a factory. That's about $165B worth in tariffs over that time period if it's on schedule and they drop the shovel tonight. (That being said, companies have already started the planning processes and working on collaborative agreements to bring more production to the U.S. They have been talking about that and picking locations for a while now).

The cost to put a plant together would be about $1-2B.

However, what do you think would unify all those auto manufacturers? Those $165 billion extra dollars in tariffs could put together a pretty good war chest in political ads campaigns against the GOP if they wanted. This could end up being a huge shift of pollical finance going away from the GOP to anyone else if they are not careful. They would save money, push out the GOP in the midyear and stall for more time without spending crazy money.

That way everyone's hunting truck wouldn't go from $75k to $100k.

​

I don’t have faith in him or any politician for that matter. I do have an interest in understanding this stuff and trying to understand why he’s moving the way he does.

I used my BA in psychology to get me a job that has nothing to do with the degree. It got my resume past the trash pile of those that didn’t have one.

With that said, psychology interests me and the political theater has components that resemble my studies in Abnormal Psychology. Lately, I’ve found the economic activity more interesting and love learning about it since I’m a DIY investor. I hated economics in HS and college, but it has grown on me and I wish I learned more when I had the chance.

I like this forum because it has a lot of experts with success in their respective fields and most of them likely far exceeded the average starting ‘pay/tuition+board’ stat I mentioned above.

Both sides have their own moral failures and vicissitude's that are fodder for the tabloids. Cynicism, quick conclusions, uninformed opinions, and trust in conspiracy theories are for the weak and lazy.

Some reasons I'm not sucked into negative mudslinging and teeth gnashing, is it’s foolish to trust any politician, I know I won’t change any stranger’s mind on a chat forum, and I don’t have anything to gain from taking a political side or making an uninformed opinion.

I do however have a lot to gain from being reflective and improving my own understanding of the political napalm currently taking place as long as I don’t walk around angry all day because my portfolio is in the red and I think the government is covering up aliens.

 

[JAG]

Psst, We are talking about January Inflation, but it’s almost April, and the country is falling apart.

Edit:
Also, I'm still learning what the heck inflation is and how to make sense of how the current administration's activity could change it.

 

[JAG]

I did a quick search on this: With an average ‘starting salary/per tuition+board’ dollar of a:
1) trade-school HS grad: $67K/free,
it obliterates the average ROI of four year college grad:
$57K/$39,000 minimum (avg tuition +room/board per Experian)

My numbers were wrong - that $39,000 tuition+board average was the minimum per year, so assuming your kid graduates in 4 years, that stat comparison gets worse:

$67K/free

$57K/$156,000

Weighing the value of college versus just high school trade is for another thread, but it is one of myriad factors impacting or at least related to inflation (still on topic)… if we get better and more jobs over here,

Does that mean more money = more inflation? My guess is if goods increase because output increases, it shouldn't.

https://www.reuters.com/world/us/trump-ratcheting-up-trade-war-presses-ahead-with-auto-tariffs-2025-03-26/#:~:text=The%20U.S.%20imported%20%24474%20billion,passenger%20cars%20worth%20%24220%20billion.

Will you please post an unlocked article?

That way everyone's hunting truck wouldn't go from $75k to $100k.

Not everybody, Randy's new hunting truck didn't cost him that much.

 

[Bonasababy]

My numbers were wrong - that $39,000 tuition+board average was the minimum per year, so assuming your kid graduates in 4 years, that stat comparison gets worse:

$67K/free

$57K/$156,000

Weighing the value of college versus just high school trade is for another thread, but it is one of myriad factors impacting or at least related to inflation (still on topic)… if we get better and more jobs over here,

Does that mean more money = more inflation? My guess is if goods increase because output increases, it shouldn't.



Will you please post an unlocked article?


Not everybody, Randy's new hunting truck didn't cost him that much.

Big miss in your assumptions...the huge potential growth of salary or wages over time for college graduates.

If you go to a trade school to be an auto mechanic and go work at a car dealer, your growth in pay is more limited. You're not likely to have any realistic expectations of moving up to more pay in management or
leading the business.

And that's not a dig on trade schools, due to the huge loss in workers resulting from those aging out of the workforce not being replaced by births or immigrants, all job training needs help and support

And that's the trend...support for them is not nearly as unique as you claimed in another post.

Just in our area I know of programs for mechanics, line workers and butchers. I know of many places that hire them do their own training too.

Have a son in law with a gov. Job where they are training him to be a county inspector who handles septic and building inspections, wetland delineations and compliance with env. regulations, etc. He started but didn't finish college.

The one kid I have who didn't go to college was hired on potential and trained in house too.

Business and local leaders and schools aren't sitting back and wringing hands at the looming shortage of employees, they are starting to address it.

They can't overcome the stark numbers though, the solutions for that...MORE immigration, $$ and support encouragement to have children, and more... are fodder for another discussion.

 

[SAJ-99]

His stated goal to balance trade is easier to toss around when you have a ‘trade deficit’. Is simple and easy to believe as it is to disbelieve.

Let me be clear, I believe that is his goal. The disbelief comes in thinking it will “work” in the way he thinks. He doesn’t understand it and doesn’t want to.

Simple transaction to show how we get the deficit…
US imports a widget from county X and exports fidgets to them. Net/net there is an imbalance in cost or quantity. $100b coming in, $80b going out. That transaction is paid in currency, USD and X currency. So we pay out a net $20b USD to country X. That is our imbalance. Country X now has $20b USD. It can convert those to its own currency (sell USD buy X currency). Which should weaken the USD. Or X can take that money and buy a USD asset, like US treasuries. The currency and treasury flows are not counted in the trade balance. So we ask how this imbalance has been so negative but when we look at the relative strength of USD to all currencies and the demand for US Treasuries (shown as Indirect bidders in auction results) to get some idea on flows we don’t see a negative impact. The flows are what matter.

Weak $dollar makes things we bring in more expensive and higher rates raises costs of borrowing (homes, cars, etc). So inflation, but we haven’t seen that. Our counterparties have generally kept USD and invested it.

Today’s news is about auto tariffs. I have heard the amount that will get passed on to consumers will vary from 0% to 25%. I heard Ferrari will increases prices about 10% so if you are in the market for one, go today, LOL.

Autos are a good example of how complicated the “create jobs” goal is (even if I think we are overly obsessed with keeping them alive). Hyundai announced the new factory in Georgia starting up this week. That project was announced in 2019. The intent was to make EVs to qualify buyers for the government EV rebate for being built in US. Does Trump get rid of that incentive? Hyundai CEO has tried to convince everyone that they can switch to gasoline vehicles, but that isn’t the easy or cheap. These new plants also cost local communities a LOT. Hyundai got over $2b in tax incentives (for 1,200 jobs!!!) mostly because Volvo decided against a new plant in GA and instead increased capacity in South Carolina after the state offered $200m in financial incentives. So they get more jobs, but do they really win? Trying to measure that is very complicated. Guessing at what a change will impact and what it won’t is even more difficult.

 

[SAJ-99]

New high school grads from trade schools earn a starting average pay of $67,000 and are college ready if it interests them. This relatively recent trend started before Trump, but I suspect his supporters want him to mess with the trade balance to shift more advanced manufacturing opportunities on US soil.

Warning, This is off topic from inflation, but what I worry about is a problem far greater than trade school vs college. We have a large % of the population that thinks the American dream is get a good job, work hard, buy a home, start a family, invest for retirement etc. I am of an age I don’t know many Gen Z. But when I look at data and talk to people that interact with them, particularly males, it seems taking risks to get rich quick is the game they want to play. Almost 50% owning some form of crypto, 40% regularly betting on sports, etc. The job is just a short term, temp cash flow provider to fund the YOLO’ing.

 

[JAG]

Let me be clear, I believe that is his goal. The disbelief comes in thinking it will “work” in the way he thinks. He doesn’t understand it and doesn’t want to.

Simple transaction to show how we get the deficit…
US imports a widget from county X and exports fidgets to them. Net/net there is an imbalance in cost or quantity. $100b coming in, $80b going out. That transaction is paid in currency, USD and X currency. So we pay out a net $20b USD to country X. That is our imbalance. Country X now has $20b USD. It can convert those to its own currency (sell USD buy X currency). Which should weaken the USD. Or X can take that money and buy a USD asset, like US treasuries. The currency and treasury flows are not counted in the trade balance. So we ask how this imbalance has been so negative but when we look at the relative strength of USD to all currencies and the demand for US Treasuries (shown as Indirect bidders in auction results) to get some idea on flows we don’t see a negative impact. The flows are what matter.

Weak $dollar makes things we bring in more expensive and higher rates raises costs of borrowing (homes, cars, etc). So inflation, but we haven’t seen that. Our counterparties have generally kept USD and invested it.

Today’s news is about auto tariffs. I have heard the amount that will get passed on to consumers will vary from 0% to 25%. I heard Ferrari will increases prices about 10% so if you are in the market for one, go today, LOL.

Autos are a good example of how complicated the “create jobs” goal is (even if I think we are overly obsessed with keeping them alive). Hyundai announced the new factory in Georgia starting up this week. That project was announced in 2019. The intent was to make EVs to qualify buyers for the government EV rebate for being built in US. Does Trump get rid of that incentive? Hyundai CEO has tried to convince everyone that they can switch to gasoline vehicles, but that isn’t the easy or cheap. These new plants also cost local communities a LOT. Hyundai got over $2b in tax incentives (for 1,200 jobs!!!) mostly because Volvo decided against a new plant in GA and instead increased capacity in South Carolina after the state offered $200m in financial incentives. So they get more jobs, but do they really win? Trying to measure that is very complicated. Guessing at what a change will impact and what it won’t is even more difficult.

This! This is a great narrative, very well explained.

 

[TOGIE]

Warning, This is off topic from inflation, but what I worry about is a problem far greater than trade school vs college. We have a large % of the population that thinks the American dream is get a good job, work hard, buy a home, start a family, invest for retirement etc. I am of an age I don’t know many Gen Z. But when I look at data and talk to people that interact with them, particularly males, it seems taking risks to get rich quick is the game they want to play. Almost 50% owning some form of crypto, 40% regularly betting on sports, etc. The job is just a short term, temp cash flow provider to fund the YOLO’ing.

is it remarkably different than the millennials whose MO was get a job to solely fund the constant travel, eat out, don't-tie-me-down lifestyle? screw retirement.

life's always been too short, it's just the mechanism of YOLO shifts around, no?

 

[noharleyyet]

Warning, This is off topic from inflation, but what I worry about is a problem far greater than trade school vs college. We have a large % of the population that thinks the American dream is get a good job, work hard, buy a home, start a family, invest for retirement etc. I am of an age I don’t know many Gen Z. But when I look at data and talk to people that interact with them, particularly males, it seems taking risks to get rich quick is the game they want to play. Almost 50% owning some form of crypto, 40% regularly betting on sports, etc. The job is just a short term, temp cash flow provider to fund the YOLO’ing.

 

[JAG]

View attachment 365750

Live well, die with company.

 

[Steiny77]

Warning, This is off topic from inflation, but what I worry about is a problem far greater than trade school vs college. We have a large % of the population that thinks the American dream is get a good job, work hard, buy a home, start a family, invest for retirement etc. I am of an age I don’t know many Gen Z. But when I look at data and talk to people that interact with them, particularly males, it seems taking risks to get rich quick is the game they want to play. Almost 50% owning some form of crypto, 40% regularly betting on sports, etc. The job is just a short term, temp cash flow provider to fund the YOLO’ing.

Nothing new here and certainly not unique to Gen Z.
Read somewhere that the average person surveyed feels they have a better chance retiring with some wealth by playing the lotto -vs- actually working and saving for it.

 

[SAJ-99]

is it remarkably different than the millennials whose MO was get a job to solely fund the constant travel, eat out, don't-tie-me-down lifestyle? screw retirement.

life's always been too short, it's just the mechanism of YOLO shifts around, no?

Maybe. I mean Boomers weren’t exactly all about getting jobs in the 1960s and 70s either. But it seems today they are more and faster ways to separate YOLO’ers from their cash. It also seems they celebrate almost to iconic status those that take advantage of the rules and winning big. Maybe I worry too much about given I have a kid that will need to make important decisions over the next 10yrs. That and the availability of articles showing the stuff. I’m sure I overstate the %, but no way to tell. The funny part is Millennials outnumber boomers and are going to be reliant on Gen z and whatever follows, to fund their “retirement”.

Gen Zers are so disillusioned with the economy that they think it’s OK to commit fraud

A third of Gen Zers either know someone who has participated in payment fraud or have done so themselves.

fortune.com

 

[Treeshark]

The funny part is Millennials outnumber boomers and are going to be reliant on Gen z and whatever follows, to fund their “retirement”.

Not all of us are. It is no one else’s job to provide for my retirement, and I have planned accordingly.

 

[SAJ-99]

Not all of us are. It is no one else’s job to provide for my retirement, and I have planned accordingly.

Individually, there are exceptions. But we are all on the same boat.

 

[Treeshark]

Individually, there are exceptions. But we are all on the same boat.

If you can see that boat is taking on water, you gotta hop off or at least put on a life preserver. I agree with your overall view though.

 

[JAG]

Maybe. I mean Boomers weren’t exactly all about getting jobs in the 1960s and 70s either. But it seems today they are more and faster ways to separate YOLO’ers from their cash. It also seems they celebrate almost to iconic status those that take advantage of the rules and winning big. Maybe I worry too much about given I have a kid that will need to make important decisions over the next 10yrs. That and the availability of articles showing the stuff. I’m sure I overstate the %, but no way to tell. The funny part is Millennials outnumber boomers and are going to be reliant on Gen z and whatever follows, to fund their “retirement”.

Gen Zers are so disillusioned with the economy that they think it’s OK to commit fraud

A third of Gen Zers either know someone who has participated in payment fraud or have done so themselves.

fortune.com

I hope your kid realizes you are smarter than him. Two of mine are solidly convinced they can solve all of life’s riddles with google and YouTube.

 

[Lostinthewoods]

Not all of us are. It is no one else’s job to provide for my retirement, and I have planned accordingly.

This.
The amount of time people waste arguing or whining on this page could easily be applied to productive things that could increase their income or decrease their expenses.

 

[SAJ-99]

This.
The amount of time people waste arguing or whining on this page could easily be applied to productive things that could increase their income or decrease their expenses.

Such is the internet, but I don't see time spent learning about a topic like tariffs or social security or another's perspective on them is necessarily wasted.

I hope your kid realizes you are smarter than him. Two of mine are solidly convinced they can solve all of life’s riddles with google and YouTube.

It's a tough call. Kids are smart and they see things a different way, and maybe that is how it should be. The more we think we know increases with time. Typically any "solution" is applying what worked in the past. Experience is useful until we start ignoring it.