The stock market increasing is not the same thing as inflation. What you're saying makes sense only if you are referring to stock market valuation... strictly retiring because inflation is high makes no sense.
That comment is unnecessary and has the effect of making people feel bad.
I think the rationale is that wages are stagnant in comparison to investments (stocks) and costs (inflation). So there's decreased incentive to focus on wages as a form of income, and more incentive to focus on investments.
I've definitely felt this personally, as my income shifts towards investments, my will to work for a wage has decreased. That shift has increased because I've accured more investments, but also because investments have grown kind of ridiculously compared to my wage.
It makes perfect sense if the decision to work is based on real, after-tax income. Change the comment to say "the tax rate keeps climbing so I quit working" and it would not occur to anyone to challenge it.
Once you have enough saved to generate income covering the very basics (probably somewhere around $30k/year in a LCOL area in the US) it becomes a question of whether selling a 40-hour block of your time on a weekly basis is worth it. For this individual, it is not.
Inflation does incentivize spending, yes. Would you rather have 100 kilos of rice today, or wait and have 99 kilos of rice tomorrow for the same price?
All inflation incentivizes is finding an asset class that isn't devaluing. If that is what you mean by "spending" then we align. But does inflation incentivize spending money on depreciating assets? Only for fools.
It feels more likely your investment account gains are driving your decisions. Stock gains are also driven by inflation though!
I can sort of understand the feeling though, I just recently got a 2.5% raise for "inflation", which hardly feels like it's making a dent.
I think OP means that once their investment returns starts exceeding their wage income, their motivation for continuing to work drops.
Which, I kinda get. If you don't really like what you're doing, it's harder to stay motivated at continuing to work when your bag of money makes more money than you do.
It sounds like OP is already planning on some amount of return to work, which may be necessary because that exact point (investment returns > wage income) isn't necessarily a safe point to retire. But it might be, depending on how much you spend, and what your not-employer-funded healthcare costs are.
Absolutely absurd, but if you got the upswing between 2010-2020, you might be in an upper class while still living in lower class, meaning your 401k is all you need to survive on while the billionaires continue to pump the market as a defacto monetary instrument and leave the dollar for the poors.
Think of it like bitcoin, but instead of owning electronic worthless hashes, you own LLCs that own stocks and take out loans on behalf ot he LLC against those stocks.
Then you just trade those LLCs around as tokens of wealth.
Welcome to the great new oligarchy.
The stock market often aligns with inflation. After all if the companies growth is not beating inflation what exactly is the point really? But that also comes at the expense of not paying people their due worth and incrementing below inflation rate.
But past returns do not guarantee future results. Stock markets ebbs and flows. It will take a blip, not even a crash, to impact those retirement accounts.
IMO this is a risky idea especially if there are jobs available.
UK has very high taxation now so working full time doesn’t bring in as much as a decent portfolio.
The logical point here doesn't make much sense to me otherwise.
What jobs have the wages gone up 30% in that same time period? I’m sure a few, but not many.
The problem is that is now over, and so wages are back to being suppressed again.
Unless you're maybe one of the few specialists in deep learning, CUDA, etc.
There's been mass layoffs and downward pressure on compensation all over.
Maybe you are the strawman consumer that skeptics point to in guaranteed basic income debates, who just stops working because they get a check.
Add high taxes to this and working is even less attractive when they take 50% from you. No wonder many highly qualified people decide to pass on that deal and just do the bare minimum which in OP case is nothing.
Sorry to be a downer but there is no certainty on the future especially with the level of chaos being sown in the western world as a function of a few key people.
Regardless of your skill and reputation, time off can quickly put you below the bar for even getting a call-back, and you lose access to relevant lessons.
You'll be shocked at how irrelevant you become, and how quickly the retirement accounts will give up the gains of the last 3 years (particularly when this 2026 IPO summer terminates US equity markets).
The feeling of "What's the point" might have little to do with work, and more to do with (finally) losing faith in ambition. If so, don't worry: the best comes after we put aside dreams.
In high inflation countries you often get a revision every 2-3 months and you get a rise that is higher than the official inflation, as a result this solidifies the inflation and boosts the economy as everyone immediately buys whatever they can before it becomes more expensive. It's a vicious cycle.
If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
This is the problem with people treat CPI as some word from the heavens...it is not. CPI is a highly constructed figure which conveniently includes/excludes things and is really more a floor of what the inflation is. Anyone living in the real world knows experienced inflation is way higher.
It’s an attempt at a central tendency in a complex economy with non-linear variability.
> Anyone living in the real world knows experienced inflation is way higher
Here is a map of wage changes across the U.S., 2024 to 2025 [1]. Lots of variance! If you’re on the West Coast, right now, you’re seeing above-CPI inflation. If you’re in the Northern Rockies, where I am, you’re seeing less.
[1] https://www.bls.gov/charts/county-employment-and-wages/perce...
Most of the average joe's money is spent on housing + food + energy these things are all way above the calculated """average""" inflation
> housing
This is actually the hardest to get right because it's the largest, and 2/3 of Americans own homes, so part of their costs are fixed.
Then there's the "owner's equivalent rent" BS and this is 25% of CPI. It answers the question "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished, and without utilities?" It assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent.
It's pricing the cost of shelter. Renting a home is buying shelther. Buying a home is buying shelter and buying a financial asset. OER is the way you separate the last two components. Otherwise, you'd have to only look at rents to determine housing prices, which would be rubbish in a country where most households live in homes they own.
The median earner with a standard deduction would need a ~4.7% raise to stay even...
"Inflation" is also increasingly distributed unevenly. The top 10% continues to make up a larger and larger portion of spending. It is entirely possible for ~4.2% inflation to be substantially higher (or lower) for the median household than the overall reported number.
If I make 100K and get a 3% increase, that's $3000 more.
But if I only spend 30K to live, and my living expenses go up 5%, that's only a $1500 increase to my living expenses while I earned $3000 more that year. So how is that a pay cut if I actually have even more money left over that basically just goes into my investment account then.
If John makes $100k and lives on $10k, then cost of living increases by 100%. I believe John should be paid $200k, and according to you his salary should go to $110k.
On average, nationally. Look up your state or metropolitan-area CPI. Or better yet, track your actual expenses and project forward.
Then, any share price appreciation on the shares is captured by you at vesting, rather than being paid in cash (the value of which has been inflated away) and then purchasing shares/index that has risen in the last 1-4 years.
If you are paid in cash, you will be buying fewer shares per dollar (and per year) rather than getting the same number.
I get your point. The value of stock isn’t that it’s stock per se, but rather that it’s inflation-resistant even when illiquid.
Just to be clear, I am not coming at this from some anti-interventionist or anti-monetary tool standpoint. It's just that demand side tools seem like the wrong lever for the job. We are backing slowly into the corner of persistent inflation or structural failure of some kind.
Ah…inflation.
edit: I've explained how this works in a reply below.
If I invest half my income and spend half my income, and the prices of goods goes up 4.2% and my income goes up 4.2%, then I've made progress; I'm now investing more than half my income, because the half of my income I was spending has stayed even and the half I was investing has increased.
Receiving "market" compensation trumps real-world expenses, since the market for one's labor is a different market than the real-world expenses.
But if you don't mind, I'll take 4.2% from your pay.
Not knowing if that's good/bad, as it is without any frame of reference, so the same data for Spain looks something like this:
Prices up +3.2% in the past year, up +22.4% in the past 5 years. Compared to 1999, a 1.88× difference, and if you want to compare since when it doubled, it'd be around September 1996. This is according to a tool from INE, Spain’s national statistics: https://www.ine.es/varipc/index.do?L=1
The broad idea is you want a number low enough that people don't price inflation expectations into day-to-day pricing but not so low that a hiccup causes deflation.
The empirical evidence around inflation persistence is a bit all over the place, but broadly suggests people start daily indexing between 2 and 5%. When that starts to happen, restraining inflation without causing a depression becomes incredibly hard, because people will actively countermand policy moves.
An offhand remark made by New Zealand's Finance Minister, Roger Douglas, during a 1988 television interview.
Stash paper cash in your safe and sure, you lose purchasing power. Use fiat money the way it's designed to be used, instead of using it like gold coins, and it works better.
If currency doesn't devalue then stuffing it under a mattress looks like a reasonable alternative to investing. If we hit deflation you can receive gains for "free" and borrowed money becomes more expensive over time. Neither of which our economic system is setup to handle.
We punish people who hoard cash by devaluing it thus encouraging them to put the money to work.
So it's not that "2% is good", but more that "2% is the best buffer we've decided above the <0% super scary threshold"
There are many other reasons a positive inflation rate is better than substantially near 0. One common complaint about inflation is that erodes real wages because nominal wages are sticky, but this is actually a good thing. It gives businesses room to breathe during downturns without cutting nominal wages or having to cut staff. Positive inflation also forces cash into productive uses which helps monetary policy because it keeps the actaul money supply more stable.
It's even more interesting to contrast this from 1971 onward. 1971 is when Bretton Woods ended and the government was given a free hand to start 'printing money' so to speak, and inflation became the new policy. Since then the CPI has increased by more than 800 points, 1600% more than our baseline. And it's only increasing faster now - to the point that these numbers I'm giving are already rather outdated.
[1] - https://www.minneapolisfed.org/about-us/monetary-policy/infl...
But the bigger issue is that inflation is generally distributed much more evenly than wage increases. Very few employers offer a COLA that is automatic, so wages almost always trail inflationary pressure.
Graph it without the logarithmic scale and draw a curve through the 1982-2018 data and the recent spike will explain why people are complaining about it.
I don’t think know that inflation was worse in the 70s helps fixes the narrative that 4.2% inflation is not good.
And the trend line would bend differently if we could just learn the lesson.
Basically, looking at inflation over time, we look pretty good here.
The higher-frequency data are more concerning. CPI “increased 0.5 percent on a seasonally adjusted basis in May, after rising 0.6 percent in April” and 0.9 percent in March [1]. (0.3, 0.2, 0.3 percent for December, January, February, respectively.)
So a linear trend of 6% from March, closer to 9% if one extrapolates the March-April-May quarter. Almost all of that driven by food and energy. Core spiked to 0.4% MoM in April, but calmed down to 0.2% in May, on trend with pre-war numbers. It’s up 2.9% YoY, but trending a bit lower. (Looked at another way, we’ve already “booked” 2.5% of inflation for ‘26. If we continue at 0.5% MoM, we close the year +5.6%. Even if it drops to pre-war 0.2%, we’re still going to be +3.8%. Given the resumption of hostilities, I’m betting we’ll be closer to the former.)
Together with the jobs numbers, it would be weird for an independent Fed to not raise rates.
Not really. They may believe the inflation is driven by supply shocks, not excess demand. For example, the oil blockade. Raising already restrictive rates wont increase the supply of oil.
They don't even need to be right. If they simply believe this is what's driving inflation, they could decline to raise rates without that necessarily indicating a lack of independence.
Personally I expect the FED not to be independent and to let inflation run a little hot while lowering rates to attack the debt from 2 angles. But even still, its not true that high CPI + not lowering rates = non-independent fed
Fair enough, I regret my edit. It would be unusualy for the Fed not to hold or raise rates.
Lowering rates, on the other hand, would be a clear WTF move.
I do not mean to be glib here either or start a flame war. I am genuinely asking.
Prices are subject to the combination of the value of the currency and the value of the good. Food may be worth more than in the past, for example, so you cannot look at the value of the currency alone.
However, if we are to change gears, the benefit you get out of a restaurant isn't constant either. Aside from maybe those trying to serve the elderly population, where there seems to be a viable niche of providing "remembrance of how things were in the good old days", restaurants that try to offer constant value quickly go out of business. They are forever needing to up their game to appeal to the typical clientele. Customers want increasingly more benefit as time marches forward to justify the visit.
An individual's perception of benefit is personal, so it is true that any given individual may not find increased benefit in restaurants trying to outdo each other by offering more and more benefits, but within populations it seems quite apparent that restaurants that "win" generally are offering more benefits (higher quality/more exotic/creative food, increasingly sophisticated ambiance, etc.) than they did in the past.
...yes it is? It's seeing how many dollars you need for some specific goods.
> the benefit you get out of a restaurant isn't constant either
It's not exactly constant but it's pretty close. Especially over a single decade. And we can assume here that people are going to similar restaurants.
To be sure, the P in CPI stands for price, but that doesn't mean it is the same thing as price. The C and I are also there to indicate that it is something else.
The price of a dollar is one dollar. That's a useless statistic.
The CPI basket is definitely not fixed. It is constantly evolving to ensure that the metric is useful. Consumption habits are not fixed.
> The price of a dollar is one dollar.
Technically true, just like the price of one iPhone is the price of one iPhone (assuming equivalent specs), but in the real world price is used to compare the value of different things. Currently, the price of an iPhone 17 Pro is 238 bushels of corn.
Steak is objectively more valuable in the traditional sense, as evidenced by the price, and also quite arguably more valuable than ground beef in the "benefit" sense, but that doesn't matter. Ground beef is just as good in the basket as CPI only needs to see relative change in price. It is not measuring benefit.
The things you are talking about are a phenomenon largely of the COVID era and later. The biggest wage gains post-COVID have been in the lowest end of the job market, and services where almost-minimum-wage labor is a high fraction of their cost have commensurately risen in price the fastest (e.g., fast food). Similarly, a lot of the easy money flowing into unprofitable grow-then-make-money businesses (like delivery firms) have stopped flowing in, so those services have had to actually make money from customers, which causes their costs to rise.
"Well, inflation since 2015 is nonexistent if you swap out steaks for 3 day old catfish and fruits for kool aid packets"
Yup.
If steak is tracked and it doubles in price, they can adjust the basket weights to reflect what they assume consumers will do: buy less beef and more chicken instead. So if Q1 steak=10 and Q2 steak=20 they might change the weights so that it's essential comparing Q1 steak to Q2 chicken. Which may be cheaper than Q1 steak, thus reducing inflation despite steak doubling in price.
They don't keep any kind of hedonic measure, which might be interesting. If a consumer would rather have steak, but switches to chicken when it's over $10/pound, and then switches to tofu when chicken hits $10/pound, they're considerably less happy even if they're reasonably well fed.
You could probably use that to calculate some kind of hedonic metric: "I was originally willing to pay only $1/lb for tofu because it brought me 20% of the pleasure that a $5 steak would have." But you're not 80% less happy overall, since food is only part of your total happiness, so you'd need a "basket" of happiness.
By the way, that coffee is $9. Sorry, Brazil tariffs and everything else - you understand.
> that coffee is $9
Lots of coffee data [1]. One I think tracks a cup in a city is up 17% YoY.
[1] https://data.bls.gov/timeseries/APU0000717311&series_id=CUUR...
If you sat down and did the math on what it costs someone to pay rent / mortgage, car insurance, health insurance, daycare, schooling, going out to eat and drink, doing anything for entertainment, go to the grocery store.. it's not a debate that the real inflation is significantly higher all the time than what is used to measure the number.
All items: +0.5% monthly; +4.2% year-over-year.
Energy: +3.9% monthly; +23.5% year-over-year.
Gasoline: +7.0% monthly; +40.5% year-over-year.
Fuel oil: +58.9% year-over-year.
Electricity: +0.6% monthly; +5.9% year-over-year.
Utility natural gas: -0.5% monthly; +3.0% year-over-year.
Food overall: +0.2% monthly; +3.1% year-over-year.
Food at home / groceries: +0.1% monthly.
Food away from home / restaurants: +0.3% monthly.
Nonalcoholic beverages: +0.6% monthly.
Cereals and bakery products: +0.4% monthly.
Fruits and vegetables: +0.2% monthly.
Dairy: -0.6% monthly.
Meats, poultry, fish, and eggs: -0.2% monthly.
Core CPI / all items less food and energy: +0.2% monthly; +2.9% year-over-year.
Shelter overall: +0.3% monthly.
Rent: +0.4% monthly.
Owners’ equivalent rent: +0.3% monthly.
Lodging away from home: +0.4% monthly.
Communication: +1.3% monthly.
Airline fares: +2.7% monthly.
Personal care: +1.0% monthly.
Recreation: +0.3% monthly.
Apparel: +0.3% monthly.
Used cars and trucks: +0.1% monthly.
Medical care: +0.3% monthly.
Hospital services: +0.7% monthly.
Motor vehicle insurance: -1.7% monthly.
Household furnishings and operations: -0.6% monthly.
New vehicles: -0.3% monthly.
Prescription drugs: -0.9% monthly.
But if you look at the sibling comment, all of that came from "Food away from home ". In other words, it's all because of takeout/restaurants, not groceries. Those were actually dragging inflation down.
Steadily rising prices will be the norm from now on. What will be interesting to see is how fast the corporate elite figure they can boil the frogs without them noticing too much.
$50.00 hotdog is coming.
A rationale for the price rarely affects my choice. If I don’t want to buy something for a price, explaining that the guy won’t be able to survive without pricing it that high won’t get me to buy it. If I do want to buy something for a price, explaining that a guy is charging a hefty profit won’t get me to not buy it.
The only thing that will get me to buy it or not buy it is if it is at the point on the price/quality frontier where I want it.
This would make you the exception. Companies are constantly increasing prices to see how much they can charge consumers before they feel cheated and stop buying and/or enough customers get priced out to hurt profits.
Consumers tend to feel ripped off if they think a price increase was due to greed but are way more forgiving if they think the price increase was needed because of something outside of a company's control. That's why companies are quick to tell consumers that rising prices are due to things like fuel prices, bird flu, or supply chain problems.
Of course, that tactic isn't as effective as it used to be since consumers have seen companies using those excuses and feed them lines like "We're all in this together!" while those same companies report skyrocketing profits and they've watched as prices remained high or even increased even after the blamed fuel prices dropped and supply chain issues resolved.
If you made 100k in say 2000 the equivalent would be 200k today. If you go by median house price your salary should have doubled since 2015!
Oil has only really maintained the ~$100/barrel price because of record SPR releases worldwide. Also, that $100 price is kinda fake because it's a future price. The spot prices got much higher. Well, that runway is coming to an end. If the Strait of Hormuz re-opened today , we'd still be facing an energy shock. Plus there's famine coming.
Now the US won't run out of oil or refined petroleum products. The uS is now a net exporter. But it's a global marekt so the prices are going to go way up. And some countries and heavily dependent on oil for electricity. They are going to face blackouts.
So even though fertilizer shortages are skewed towards the Global South, food prices too are global so they're going up too.
In 1973, the energy shock took ~6 months to manifest [1].
But I think the real problem is dynamic pricing. Inflation is insidious. People start raising prices on the expectation of rising prices, thus causing prices to rise. But so many industries now are going well beyond that by essentially colluding through AI tools (eg RealPage) to further raise prices.
I honestly don't know how this ends without a deep, long recession.
[1]: https://paulkrugman.substack.com/p/oil-crises-past-and-possi...
The same way Powell ended the last one without a deep, long recession.
The US national debt is about to hit $40 trillion. It was $20 trillion 9 years ago.
What Trump and Biden should've done is implemented a windfall profits tax of probably 80%. But there's absolutely zero chance of that happening by either party.
The national debt was added before the inflation took hold to counter the Covid recession. (When the MMT nutters were at the helm.)
Powell cured the resulting inflation without causing a recession. He did that without adding anything to our national debt.
> What Trump and Biden should've done is implemented a windfall profits tax of probably 80%
This just creates a political game of defining what is and isn't a windfall. A progressive corporate tax achieves what I think you want to without the side effects.
Either way, the playbook for getting out of this is steeply increasing rates and then moderating them before inflation hits target.
That doesn't actually seem like a huge achievement. Inflation is the rate of change so if you stop creating as much money out of thin air, then it's not really a surprise that prices don't increase as much.
Historically, it has been.
> Inflation is the rate of change so if you stop creating as much money out of thin air, then it's not really a surprise that prices don't increase as much
You're confusing money supply and price levels. Inflation measures the latter. You can have constant money supply and stable prices, inflation or deflation. And since most money is privately created, controlling how much money is and isn't created "out of thin air" is actually quite challenging.
They're closely related.
> And since most money is privately created, controlling how much money is and isn't created "out of thin air" is actually quite challenging.
It's the central bank which controls the interest rates, the reserve requirement and other stuff which affects it.
See also the +25% inflation / -1.2% net wages after inflation over five years chart here, for those unfamiliar with how inflation % press releases are misleading over time. If household spending power is -1% after +4% inflation, then that inflation probably isn’t healthy for your country’s economic future, etc.
https://www.statista.com/chart/32428/inflation-and-wage-grow...
(I also suspect the wage index itself is disguising about the total wages paid index dropping like a stone, but haven’t done the math to chart it yet myself yet.)
every single day $5/gas is taking a BILLION dollars out of the economy that could have gone elsewhere
but it could be worse, we could be innocent civilian Iranians having the US bomb their water and power plants this week
https://www.drewry.co.uk/supply-chain-advisors/supply-chain-...
With respect to those numbers, I remember this recent accusation of price-fixing across 2019-2021 [0] that might have an effect, although I also have reservations about how much to trust anything coming out of the rotting US Department of PresidentsPersonalLawyers these days.
[0] https://www.justice.gov/opa/pr/four-worlds-largest-container...
It serves the US Energy Dominance Agenda against China, Japan, India and the EU.
The Trump administration does not care about "its" population. There were already rumors early in the Trump term that Trump would not mind a recession so that his real estate cronies could buy cheap foreclosures.
So it is all a double win for the oligarchs. The stock market is still fine, nothing else matters.
The administration's planning is much more along the lines of, Will this look cool when they announce it on Fox News tomorrow? If you think there's much beyond that, you're ascribing strategic clarity where there isn't any. They're continue to flail around and TACO until they have a result they can present to MAGA loyalists as a success, regardless of actual merits.
It's not a question of ethics. It's a question of competence.
The people with strategic goals just send money and compliments and the administration does what they want.
The energy dominance model was already floated by Trump in his first term. He was the most vocal critic of Nordstream long before the Ukraine war. Biden couldn't push so aggressively because of the green agenda but dutifully shut down Nordstream and made the EU dependent on US LNG.
Now with the oil barons in power, there are no green agenda limitations and the long term plan (which is 100% not from Trump himself) can accelerate.
Look how they already make the EU and Japan rearm with all these levers (they should rearm, but for the purposes of keeping waterways free from whomever blocks them ...).
…how? What is this agenda? Juicing short-term energy exports? That’s not a “dominance agenda.”
https://www.eenews.net/articles/white-house-launches-energy-...
It works towards increasing US energy production at all costs even though the US is already a net exporter.
What is not mentioned of course is that increased US dependencies of countries like Japan are a feature:
https://energytracker.asia/japan-to-buy-record-amounts-of-ln...
That model, extort US investments and let Japan build US infrastructure in return for LNG was from 2025.
Now, with the Iran conflict, Qatar is shut off and Japan can be pressured even more.
I see your argument. It’s still short term. A fifth of Japanese electricity comes from renewables [1]. Meanwhile, Japan is diversifying its LNG suppliers [2].
From what I can tell it’s also supercharging coal, particularly in Asia, e.g. India investing in coal gasification infrastructure [1].
[1] https://www.reuters.com/business/energy/india-clears-4-billi...
For one even in the short term this is benefiting China as its the largest renewables producer in the world and much less exposed to ME fuels than Japan and America's allies, who are to put it in plain English, fucked. (Japan gets 80-90% of its resources from the Gulf, China ~15-20%)
Secondly the only thing that wakes the American voter out of his or her perpetual stupor is the cost at the gas station, and every single person responsible for this will be voted out of office. I cannot imagine that even the oil industry wants a blue wave just because they could crank the prices for a few months
I can believe the US/UK oil companies believe that.
It may even be true, because the energy transition caps the entire future opportunity for oil/gas sales, and all the producers have been trying to capture a larger share of that pie for the last 2 years or so.
But this intervention is so heavy-handed that it is visibly destroying that future market. It looks like all oil companies will lose a lot because of it, US/UK ones included.
> The Trump administration does not care about "its" population.
Yes, he's trying to govern like an oligarch. We will see in November if this was a good choice or if the US is still too democratic for this to work. Or earlier if he tries to avoid that test.