Inflation erased U.S. income gains last year
64 comments
·September 9, 2025PieTime
vcryan
Yes, I have absolute disdain for both parties.
danaris
Third parties are nonviable in most of the US due to our voting system.
In order to make it mathematically possible for a third party to compete, we need to switch to something with more nuance than single vote, first-past-the-post winner-take-all elections. Ranked Choice Voting has some momentum right now, and AFAICT is no worse than any of the other options (they all fail in certain edge cases, I believe; it's just a matter of which ones).
null
SOLAR_FIELDS
RCV also has the advantage of being relatively understandable for the layperson unlike some of the more esoteric ones I’ve seen
jus3sixty
Const economy = [ “People living check to check”, “Landlords living month to month”, “Corporations living bailout to bailout”, “Governments living war to war” ];
Esophagus4
I’m nervous Trump seems to be pushing so hard for rate cuts given this reality of what seems like uneasy inflation.
That will likely benefit hard assets like real estate and those with big stock portfolios, as top blue chips generally have some pricing power to offset increased cost, but I think real income will drop and you’ll get all sorts of weird second order consequences.
If I had enough confidence in it, an interesting bet might be borrowing to invest in big tech blue chips. You’re betting that Trump gets his way with the Fed politically, tech benefits from low rates, tech has power to raise prices, and that Trump will inflate away your debt.
Won’t be good for most Americans, but if you can’t beat em, join em?
{not financial advice}
bradleyjg
The Fed only controls the overnight rate, the shortest term rate. If it loses its reputation for independence we may well see higher long term rates even if they cut the overnight rate to zero. That would be quite bad for real estate.
The next step if that happened could well be the puppetized Fed expanding the balance sheet to buy long term bonds. That would probably be bad for everything. Except perhaps gold.
NewJazz
Debt is usually one of the best hedges against inflation. Instead of buying stocks on margin, though, people usually buy more price inelastic assets like homes.
Esophagus4
Yeah, I’ve just never really liked the carry costs of a house… taxes, maintenance, utilities, transaction costs, etc. and never wanted to deal with being a landlord.
Plus, while the real estate market on a whole might go up, I have a hunch the chances of one individual house appreciating are more varied than the chances of one of the big tech stocks appreciating… as they are the market at this point.
Edit to add: I think for the average American, real estate is the only plausible way to invest on margin, as you’ll never get 5:1 leverage at your brokerage, if you even have a brokerage.
ajross
That's because the median person qualifies for a vastly larger mortgage than margin limit.
Margin trading is for the already-wealthy. You can get a home with near-zero assets.
hiddencost
Relatively benefit. Everyone will be poorer in real terms but they'll lose less quality of life.
pavlov
This year both inflation and unemployment are going up, so it’s only getting worse.
deepsun
And debt is going up as well.
estearum
On the plus side so is energy costs
msandford
I can't wrap my head around anyone being happy about this who isn't extremely rich. Would love to understand.
themafia
Which would all be fine if wages were being adjusted at the same rate inflation is. The American worker class and the ownership class drift further and further apart.
tzs
At least /r/leopardsatemyface has plenty of material.
taneq
At this stage you might be concerned that everyone's just having too much of a good time, but rest assured, they aren't.
throwawaymaths
opec just announced production hikes
nickthegreek
i got bad news about health insurance costs…
esseph
I'm hearing higher than 25%+ all-in...
newfriend
Inflation is lower than it was at the beginning of the year. Which means inflation is actually going down this year.
Retric
We don’t have accurate data for most of 2025. The second half of 2024 was much better than the first half of 2024 which is really helping those year long moving averages, but the monthly inflation numbers have been increasing recently so it’s far to early to say what 2024 vs 2025 will actually look like.
chrisco255
Yes we do, price data is very reliable on a monthly basis:
https://www.bls.gov/charts/consumer-price-index/consumer-pri...
Employment figures are different and have had lots of problems in recent years.
toasterlovin
Tariffs are just starting to work their way inoto consumer prices now.
chrisco255
Tariffs are deflationary, actually. They are a form of taxation and act to inhibit demand.
Anyways inflation is actually declining and is well below 2022 levels.
https://www.bls.gov/charts/consumer-price-index/consumer-pri...
argentinian
Do people in the U.S. have a good understanding of the causes of inflation?
kattagarian
This is something being debated across the world. I'm not american and in my country economists wages war over the "inflation is the result of monetary expansion". I know nothing about it, the only thing i know is that inflation is getting worse (almost) everywhere.
OgsyedIE
Not even most economists do, by analogy to how opaque the questions of lifting bodies and rayleigh scattering are to physicists.
taneq
The money goes faster on the top side of the wing, which means the money underneath the wing is more compressed, lifting up both sides of the wing. This is known as the "trickle-down" theory of lift.
Eddy_Viscosity2
Yeah no, economists and a lot of people understand the the causes of inflation. There are economists who are paid very well to not understand it though, and such positions are often high in the government and financial sector hierarchies.
chrisco255
Are these the same Fed economists that claimed the elevated inflation levels were transitory in 2021?
There are multiple schools of thought on causes of inflation, but generally I agree with late Milton Friedman that it is "everywhere and always a monetary phenomenon". Money supply expansion growing faster than GDP expansion causes inflation.
OgsyedIE
No really, transonic flow and turbulence are less complicated than what's really going on underneath the quantity theory of money. If it was easy there would be fewer economists.
ajross
The only people certain about economics are the kind of folks who run around on HN talking about "printing money". Too lazy to look up your post history to see which camp you belong in.
But no, macroeconomics is understood from sound general principles, but it is not a robust predictive theory. The analogy upthread to Navier-Stokes is apt.
dennis_jeeves2
No.
To me the answer is very simple, the primary (not sole) driver is govt printing currency indiscriminately.
bryanlarsen
We've had a dozen instances of massive money printing since the 80s but no significant inflation until we had the COVID supply side shock. Now we're getting inflation because of tariff uncertainty, also a supply side shock.
Friedman is wrong, inflation is primarily caused by supply side shocks.
argentinian
what do you mean by "supply side shock"?
throwawaymaths
It's more complicated than that (lending also increases the money supply) though you're right that "printing money" loosely speaking is the primary irreversible driver.
dennis_jeeves2
Of course the printed money has to be put into circulation ( either lending or spending by the gov)
orwin
Depends on the default rate, and I'm pretty sure the past year in the US, default created more money than what was printed (even taking QE into account).
Basically why everybody decided to go with money printing during COVID btw, people realised in 2008 that a 2B default is the equivalent to printing 2B, so if that's the case, why not print money instead (that's a bad calculation imho, in my opinion in a capitalist market economy you need defaults for the market to work, and I would say, you need defaults that pierce the corporate veil).
throw__away7391
People in the US believe that if inflation eases, for example from 4% to 3%, that means that prices are going to go back down to what they used to be before inflation started rising. They furthermore believe that if that does not happen it is proof that the media is lying.
_--__--__
Politicians love communicating about 2nd and 3rd derivatives of prices and debt in ways that even mathematically literate people have trouble immediately interpreting. There's a famous quote about Nixon doing it but it's honestly the current standard mode from all sides trying to avoid blame for the state of the deficit and monetary supply.
esseph
Absolutely not, as a rule.
bithive123
"Inflation" simply refers to a rise in general price levels. The cause of inflation is known: someone sets a price.
There isn't a single reason why someone might raise a price. It could be that they have some ideology about the size of the money supply (i.e. "printing money") or it could be that the costs of their inputs went up ("inflation") due to tariffs, or other supply chain problems. Or it could be a cynical bet that the market would bear a higher price ("using inflation as an excuse").
Blaming inflation on this-or-that cause is most definitely a political rather than theoretical exercise.
argentinian
Why would it be impossible to research it's cause in a specific context?
You are not offering an argument about why can't it be investigated.
denimnerd42
Erased the spending power of my savings (investments) as well.
cramcgrab
Time to cut interest rates. I’m tired of paying high mortgage interest and loan interest.
FirmwareBurner
Me as an European with this issue for 3+ years: "first time?" /meme
When I see sub 40 percent approval rate for both parties in congress… we’ve almost reached the moment where a majority of people believe both democrats and republicans have a negative view yet the 3rd parties will remain elusive due to gerrymandering districts.