cost push Inflation coming

What Does Cost-Push Inflation Mean?
A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

What I'm seeing is raw material / partially finished COGS pricing inflating but that's putting pressue on margins which will keep wages down...

I would bet that auto companies, appliance makers and others pass the prices along. Will be interesting to see what G.M. does now that it's government motors. If they can't keep the same volume at a higher price will the tax payer eat the loss?

pretty clear you've never been in business. no one is passing along cost increases for consumer products in an economy like this. fixed costs remain a large component of overall cost so there's always a competitor willing to hold the line on pricing or better yet continue to cut.

stick with youtube.

look at lumber prices lately

lumber is not a consumer product; its a commodity. very different pricing dynamic. was recently in local lumberyard---anecdote from there was contractor business non existent somewhat offset by big uptick in do it yourselfers. hoping for no more layoffs.

How did I know it was RS?

RS, according to your General Theory of Everything, inflation is a purely monetary event that is unrelated to changes in prices: it is simply a change in the money supply.

Therefore, there can be no such thing as "cost-push inflation," because the increase in those prices will merely crowd out other prices, and cause a reallocation of assets.

Much like you claim government spending does.

Or have you become a Keynesian all of a sudden?

"I would bet that auto companies, appliance makers and others pass the prices along."

Then you don't know anything about supply and demand. Need I give you the lesson?

Gotta jump in here and agree with cc (not my customary position in a cc vs. rs debate, to be sure). The idea of cost push inflation with unemployment at nearly 10% (and going nowhere) and capacity utilization where it is is just comical. Agree with cc and 13 that any increase in raw material costs goes to margins, not price.

Sideline, no idea what cc has said as I have him on block, but Steel is a major cpt of cars and steel companies have announced major price increases. The car companies will not be inclined to sell cars at a loss on an ongoing basis. The extent to which they scale back production in the face of weak demand will relate to fixed vs variable production costs. G.M. will be the interesting story here since they can have the taxpayer absorb losses.

He's basically saying that your theory makes no sense. I happen to agree.

Fine, we'll revisit in three months.

perhaps you may want to attempt to explain to riversider the difference between fixed costs and variable costs? on the other hand, why bother?

RS, you (again) blithely ignore my critical question: the Vienna Schools does not allow for wage or price inflation, only for monetary inflation. Ask Paul Schiff.

So - what's your post about?

The world is not so simple and Economics is not physics.

Steve, Are you an idealogue?

No, RS, a Keynesian. Not a novel reader.

Don't believe in no animal spirits.

http://www.youtube.com/watch?v=d0nERTFo-Sk

oh no...you've been tubed.

columbiacounty
Ignored comment. Unhide

ugh, the steps I have to go through to read columbiacounty's anger

Steel is a tiny component of the things that make up CPI. Irrelevant. The price of cars is more contrained by global overcapacity than it might be impacted by the price of steel, and cars have generally been DEFLATING for years as formerly expensive "luxury" options become standard for free and productivity gains drastically drives down the cost of production. TO cite ONE example.

First the CPI is a gov't view of inflation which benefits.... the gov't.
Steel is used in just about everything construction, appliances and cars.
Add to that oil is up substantially from the low
and the Chinese Yuan is poised to appreciate

Add real interest rates going up due to too many bonds chasing too few dollars

and costs are going up.

http://money.cnn.com/2010/03/30/news/economy/coming_inflation.fortune/

Back in the treasury market, 30-year treasuries have gone from yielding 3.73% to yielding 4.72% over the last year. That increase has happened for shorter-term treasuries -- the short end of the yield curve -- as well. And all these increases have happened despite the fact the Fed has maintained its target rate at 0 -- 0.25%. Bond yields, in other words, are already accounting for inflation.

Finally, in the chart at the top of this page, we've plotted the Journal of Commerce Industrial Price Index over the last year. This index charts the price of key commodities that are used in industrial production. The chart is up and to the right, screaming inflation. Commodity inflation will likely lead China to report its first trade deficit in March in 6 years!

As they say, the markets don't lie, people do (or government statistics as the case may be). Based on the evidence above, we're sticking with our inflation call -- until the markets, and the data, tell us different.

gibberish...

the gov't is corrupt and lying
steel is important but maybe not that important
oil is up from last years lows but down substantially from two years ago...but what the hell does that have to do with anything in this post?
and the chinese...well, never hurts to throw them in the mix?

oh...and while i'm at it interest rates are going up unless they're going down

and yes...i am foaming at the mouth.

columbiacounty
Ignored comment. Unhide

What?

http://www.youtube.com/watch?v=9LWNTUK8KtA&feature=player_embedded#

tubed again.