What drove inflation in 2021. 70 percent of the deviation was due to three items: Cars, oil, meat.

[mahatmakanejeeves]

David Weigel Retweeted

Must-read piece from
@M_C_Klein
about what drove inflation in 2021. He finds 70 percent of the deviation from trend was due to just three categories: Cars, oil, and meat. https://theovershoot.co/p/understanding-covid-flation

Link to tweet

[Sherman A1]

1. I would say it was one item

Price Gouging.

[TheRealNorth]

2. When it comes to oil and meat, absolutely price gouging

Cars may be a combination of material shortages and increased demand (car renters sold off their fleet during Covid are now trying to build their fleets back up with new cars).

And let's not forget which political party dominates the petroleum and meat production industries.

[JT45242]

3. And cars is usually the easiest to avoid

Yes, the supply/demand curve for cars is totally out of whack. Especially in the used car market -- making those prices crazy.

Yes, a lot of very high priced new vehicles hit the market and the napoleon effect of little guy wanting big ass expensive truck is common (my BIL would be a prime example).

But -- for most people a car is something you can wait on. Especially after two years of the pandemic. Most people put a lot fewer miles on their cars oin the last two years so they can wait longer to replace what they have. I started to look at a used vehicle knowing that one of ours is paid off later this yera just to do research and realized that even looking now is foolish as the prices are so high because a host of macrolevel problems.

I definitely see the effect on meat prices.

Oil -- gas is a little higher than 2019 but it was artificially low from March 2020 through early 2021 because of a lack of world wide demand. So, how they calculate it there is an issue. Plus the larger scale problem that the companies that used to work on tar sands and other fracking have decided that they will not add new wells. They could actually make more money if they would start some new production and drive the cost per barrel down 25%. But they are adamant that they will not because they are afraid that too many wells wil open and drive the prices so low that they won't be prfitable. Which is exactly what the Saudi's planned when fracking was at its highest point. They flooded the market to the point where cheap production like Saudi Arabia and UAE were running at cost while frackers and other American drillers were losing money. They drove them out of the business then slowed production to a trickle to drive prices up (just like the 1970s). Add to that, TDFG wrecking the Iran deal so that they can't sell oil and you have greatly lowered the supply side of the curve.

[TheRealNorth]

4. Plastic prices are also very high...

I agree, Mohammad Bin Bonesaw is undermining Biden and the Democrats to get his Republican buddies back into power.

[MichMan]

5. Plastic is made from oil