RDU is building a new 10,600′ runway. It will cost “more than $500 million” (source) and the project will take five years (completion scheduled for 2028). The runway being replaced was built in the 1980s. I can’t find anything about how much it cost to build.
Back in 2019, this public works project was supposed to cost $350 million (source). So there has been inflation of 43 percent over a four-year period (official CPI from the BLS is up 21 percent).
Related:
Cost to rebuild three conference rooms at the White House: $50 million.
We are informed that inflation is at 3 percent. The various county and local governments here in Palm Beach County/Jupiter somehow did not get the memo. A “Notice of Proposed Property Taxes” that I recently received shows that the taxing authorities are increasing their budgets by about 9.5% on a per-resident basis. The notice shows the millage rates with and without the proposed budget increases.
(I don’t think that the budget increases can be explained by the lockdown-driven exodus from the Northeast. The county’s population grew by only 13,000 in 2022, less than 1 percent (Palm Beach Post).)
Note that the first $50,000 of value is exempt for full-time residents under the “homestead exemption” and the assessed value for a primary residence cannot go up by more than 3 percent annually (but there is no limit to increases for the millage rates?).
Readers: What’s happening to your property tax bills in our 3% economy?
One of our neighbors is an accomplished oil painter. Here’s a photo that I took of what I think is one of the nicer-looking houses in the neighborhood for her to use as the basis of a painting:
What I think is the same house, but in white:
(The truly custom houses in this area are reserved for the truly rich!)
While shopping for furniture that would help our senior golden retriever get up on the bed, I found this upsetting example of inflation:
We’ve been in our house for a little over a year and it is time to order some additional furniture. I spent a little time on the web sites from which I ordered a 1-1.5 years ago and, for those products that are still offered, compared prices.
Americans’ perception of inflation certainly seem to be higher than the official CPI numbers. Workers demand 30 percent raises (and get them, in California) when Pravda says that inflation has been less than 10 percent and is now down around 3 percent. Previously, I’ve wondered if part of that is due to delivery times stretching out into the next Ice Age: Is inflation already at 15-30 percent if we hold delivery time constant? The quoted price doesn’t go up more than 20 percent, but you might not get your refrigerator for a year or more (a Sub-Zero fridge that was formerly available in 7-10 days now takes 12-15 months). A Cirrus SR20 is priced at more than double what we paid for our 2005 SR20 from the factory, but delivery time is 2 years instead of 3 months. What’s the actual price of something that doesn’t exist?
After talking to HVAC contractors, a regular event here in Florida, I’m wondering if this is also partly due to repair parts shortages. A/C systems that were designed to last 12-14 years are being scrapped at 5 or 6 because essential parts (not as “essential” as marijuana in Maskachusetts or California, but required for cooling) are theoretically available, sometimes for free under warranty, but practically unavailable (lead times of 8-12 weeks, which is no solution at all in a South Florida house).
For the HVAC inflation that does make it into CPI, here’s a tracker page from a contractor (the Trane section because that’s what came with our house). The prices went up about 5% in May after going up 10% in January after going up about 4% in September 2022 after going up 9-18% in May 2022….
“Price hikes loom for consumers with the loss of Yellow trucking” (NBC, two days ago): After the shipping giant filed for bankruptcy, its competitors have already indicated they will not match its low-cost pricing. The U.S. just lost as much as 15% of its small-batch trucking capacity — and consumers are likely to feel the effects in higher prices as the holiday season rolls around.
The BLS will release official CPI data tomorrow. Last month, inflation was whipped, with the index only 3 percent higher than in June 2022. From state-sponsored PBS:
(in other good news, the chocolate ration has been increased to 20 grams per week?)
Let’s look at the actual index:
Notice the strange little peak in June 2022? I am thinking that this peak might have been measurement error that made last month’s number lower than reality.
(good news for San Franciscans who previously enjoyed fentanyl in parts of the U.S. where fentanyl dealing/use is illegal: the job is open to those with “arrest and conviction records”)
The inflation rate in Berkeley is literally infinite. A paper bag that previously cost 0 cents is now 25 cents:
Climate change has had a dramatic effect on EAA AirVenture (“Oshkosh”). High temperature today was 90 degrees, 12.5% higher (using God’s preferred temperature units) than last year’s 80 degrees.
How about prices? We parked a car at the seaplane base this morning. It’s $25 to park for the day, 67% more than the $15 charged a year ago (the Biden administration says that inflation is 3%).
Speaking of the seaplane base, here’s a Cessna that was previously parked in a tow-away zone:
…and some general photos…
Finally, three cheers for AirCam. With two people on board, the twin came off the water after about 100′ with no apparent transition from plowing to step!
“Inflation has moderated somewhat since the middle of last year,” Mr. Powell said. “Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go.”
“Inflation has consistently surprised us, and essentially all other forecasters, by being more persistent than expected,” Mr. Powell said. “And I think we’ve come to expect that — expect it to be more persistent.”
He added that there’s a “common factor” that has driven price increases higher. “It’s the pandemic, and it’s everything about the pandemic: The closing of the economy, the reopening of the economy, the fiscal support, the monetary support. All the things that happened went into high inflation.”
Of course, it is the virus that is to blame, not the human response (panic everywhere other than in Sweden) to the virus! But if the wild government spending on coronapanic is now the official cause of inflation, how can the Fed stop inflation? Congress continues to spend wildly with annual budget deficits that were, prior to 2008, seen mostly during wars. From the CBO:
Separately, here’s my latest inflation achievement… paying $30 for Pad Thai (Jackson, Wyoming):
That was one week after getting a haircut in a barber shop… for $55 plus tip (Big Sky, Montana).
I hope that all white readers who are members of the laptop class and/or government employees are enjoying their paid holiday for Juneteenth. For readers (like me!) who suffer from reduced income as a consequence of reduced working hours, let’s have a look to see whether we can afford to take it easy…
“You have to look at year-over-three-years replacement costs, and they’re high,” [Triple-I CEO Sean] Kevelighan said. “Personal homeowners replacement costs are up 55 percent. We’ve got personal auto replacement costs up 45 percent.
The three-year inflation rate, as perceived by insurers paying claims, is around 50 percent. Maybe the problem is behind us thanks to the muscular efforts of Joe Biden to whip inflation? “State Farm Halts Home-Insurance Sales in California” (Wall Street Journal, May 26):
State Farm is stopping the sale of new home-insurance policies in California effective Saturday, because of wildfire risk and rapid inflation in construction costs.
State Farm is the nation’s biggest car and home insurer by premium volume. It said it “made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.” It posted the statement on its website and referred questions to trade groups.
I think that we can ignore the wildfire risk as the primary business reason here. The wildfires of 2023 aren’t dramatically riskier than the wildfires of 2022. Maybe State Farm is just being greedy so that they can enrich their fatcat shareholders? They’re not truly losing money on new policies, but are trying to pressure California regulators into giving them yet more profits:
State Farm is a mutual company, meaning it is owned by its policyholders, and it has deep pockets. It ended 2022 with net worth of $131.2 billion.
Why does it matter if construction costs are outpacing inflation, as State Farm says? Our grow-the-population-to-450-million-via-immigration plan will result in skyrocketing rents and miserable living conditions for most Americans unless new housing can be built at some price that is affordable to low-skill migrants (who earn below-median wages).
Let’s have a look at a newly built house just north of us in Martin County, Florida, far away from the high prices of Miami and Palm Beach. It’s only about $5,000 per square foot and comes with 2 acres of land:
Related:
City rebuilding costs from the Halifax explosion (in which we look at the numbers for a Boston housing development where a two-income couple working full-time at the median wage couldn’t afford the bare construction cost of an apartment, much less the land or any profit for the builder)
I took our 2.5-year-old Honda Odyssey in for a B127 service, for which I’d made an appointment. Due to the dealer being short-staffed and, apparently, not completely organized, they couldn’t do “7” (brake fluid change) without adding a multi-hour wait on top of the promised 1.5-2-hours.
The parts stock situation has improved compared to 1.5 years ago in that they had all three wiper blades available for the minivan compared to just one back in 2021. The car stock situation is also slightly improved, with a handful of new cars in stock and available at $2,000 over retail. It was $5,000 over in 2022, but of course the total price in nominal dollars is similar because Honda has raised the list price. The identical minivan that we leased in 2021 for $400/month is available… for $800/month. Here’s a 2008 jalopy that, pre-coronapanic, the dealer would have sent to auction (the venerable Ford Taurus sits amidst the parking spaces that in 2019 were jammed with new cars):
Fresh from a checkup with one of America’s 190 board-certified veterinary dentists, Mindy the Crippler was my companion for the two-hour wait and made a lot of new friends inside the dealership. I left her with another customer while I went to get coffee and returned to find that the invasive species had invaded the vinyl seats:
My question for today is how consumers are able to keep spending like drug dealers and/or alimony plaintiffs. A lease quote is the best indication of the true cost of car ownership because it factors in the time value of money and the market’s expectation of depreciation. The cost of car ownership gone up dramatically doubled for anyone who needed to buy a car in the past two years or so, especially when you factor in higher gasoline prices. Therefore, these car owners should have less money to spend on rent, TV/phone subscriptions, entertainment, dining out, trinkets, etc.
What’s new in the Honda minivan world, aside from nothing? Honda seems to have dropped their basic trim level. For Corvette enthusiasts, there is a new “Sport” trim level that has black wheels:
What do readers think? To me, it looks like an old Dodge Caravan whose wheel covers were boosted in the Bronx.
Wikipedia says that pre-coronapanic production of this car was 100,000-130,000 per year between 2009 and 2019. For 2020, however, production fell to 83,000. In 2021, production was down to 76,000. In 2022, it fewer than 48,000 Odysseys were made. Half as many cars at 10X the total profit for manufacturer and dealer? Do we suspect a continued chip shortage or quiet collusion among the handful of major car manufacturers?
If integrated circuits were primarily made in the U.S., it wouldn’t be surprising to find them still in short supply. After all, quite a few Americans were introduced to the advantages of sitting at home playing Xbox all day and habits, once formed, are tough to break. But the Japanese, Koreans, and Chinese continued to work during coronapanic. Why aren’t these hard-working nations making as many chips as car companies need/want?
Against the collusion hypothesis: if the legacy car companies won’t supply a mass market anymore, that opens the door to infiltration by Tesla, Lucid, and Hyundai/Kia (sort of a legacy car company, but also not exactly mainstream until recently).
Related:
“Car Dealer Markups Helped Drive Inflation, Study Finds” (WSJ, April 23): “extra dealer profits contributed between 0.3 and 0.5 percentage point of the nearly 16% rise in the consumer-price index between the end of 2019 and the end of 2022, a study published in a U.S. Bureau of Labor Statistics journal found.”
Pravda says “The U.S. is now two years into abnormally high inflation“:
The U.S. is now two years into abnormally high inflation. But 2023 inflation is drastically different from the price increases that first appeared in 2021. Here’s why.https://t.co/2ksnZPLkWv
But wouldn’t it be more accurate to say that we have roughly the inflation that we should expect given the level of deficit spending that we voted for? To prevent runaway inflation, the EU established a deficit limit of 3% of GDP for member countries and a debt-to-GDP ratio of 60%. The US deficit has been 5-15% since 2020 and was higher than 3% before that:
U.S. inflation today is drastically different from the price increases that first appeared in 2021, driven by stubborn price increases for services like airfare and child care instead of by the cost of goods.
We can buy as many DVD players as we want, in other words. It is only services that are going to be unaffordable to the non-elite. What percent of the economy is subject to a wage-price spiral, then? 77.6 percent.
