Home Insurance Increases

[Major]

This is a natural consequence of inflation. Everything else is 30% or more expensive than it was before we destroyed our energy position. Unfortunately, we are only experiencing the tip of the iceberg. Things are going to get progressively worse unless we change our economic policies.


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[John Mercier]

Originally Posted by Major

This is a natural consequence of inflation. Everything else is 30% or more expensive than it was before we destroyed our energy position. Unfortunately, we are only experiencing the tip of the iceberg. Things are going to get progressively worse unless we change our economic policies.


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Our energy position? We have record net exports in every category except coal. Coal net exports have yet to return to 2012 levels, but that is world demand... not something the US can control.

Our inflation is due to higher labor costs resulting from a smaller workforce... we pay a lot more for trades people... and higher quality/design on the materials side.

We know how to keep housing costs down... we just don't want to.

[Major]

Originally Posted by John Mercier

Our energy position? We have record net exports in every category except coal. Coal net exports have yet to return to 2012 levels, but that is world demand... not something the US can control.

Our inflation is due to higher labor costs resulting from a smaller workforce... we pay a lot more for trades people... and higher quality/design on the materials side.

We know how to keep housing costs down... we just don't want to.

That was a polite way of saying that the economic policies implemented by the present administration during their first week in office caused the spike in fuel prices, essentially more than doubling fuel costs during the immediate time frame. This spike caused the inflation that we are now living with, even though fuel is still 50% ($2.40/gallon on January 20, 2021 vs. $3.62/gallon today). If you don't believe a 50% plus increase in the cost of fuel caused the inflation that we see today, I have a bridge to sell you. It has nothing to do with labor.

[John Mercier]

The inflation is too much demand on labor, and not enough customer efficiency.
I live with it every day.

We can't find employees... and the customers will not change their pattern to be more efficient. In fact, they have chosen to be less efficient.

That causes more need for labor... and as the demand on labor increases... labor inflation takes hold.

Hence why large FED interest rate increases have not even created a dent.

[Major]

Originally Posted by John Mercier

The inflation is too much demand on labor, and not enough customer efficiency.
I live with it every day.

We can't find employees... and the customers will not change their pattern to be more efficient. In fact, they have chosen to be less efficient.

That causes more need for labor... and as the demand on labor increases... labor inflation takes hold.

Hence why large FED interest rate increases have not even created a dent.

I disagree. Increases in the cost of labor is a result of high energy costs, which increased the costs of everyday goods. The high energy costs were the genesis of the inflation, not labor shortage, which we were dealing with prior to January 2020.

[John Mercier]

Originally Posted by Major

I disagree. Increases in the cost of labor is a result of high energy costs, which increased the costs of everyday goods. The high energy costs were the genesis of the inflation, not labor shortage, which we were dealing with prior to January 2020.

I paid more for gasoliine and pre-buy heating oil in the summer of 2008.
I currently make more than double the wage for roughly the same work.

I use less gasoline now than then (more efficient vehicle) and less heating oil (improvements in my home).

All the local lumber yards have been in hire mode for months...
We acquire employees from each other, and sometimes from our contractors (which unfortunately hurts the contractors).

Even our vendors in other parts of the country are experiencing the same thing... window demand is so high that what used to be a four to six week lead time is now in some cases more than twelve weeks. By raising the prices, they can afford the higher cost of acquiring labor... and we thought... slow the demand. Demand doesn't seem to be slowing...

High energy prices would show up in activities that require lots of energy being avoided... so high gasoline should show up as less vehicle travel and less boating.

We just are not seeing it happen.

As for policy, record setting net exports last year for 1.6 million barrels per day of oil and over 20 million cubic feet per day of natural gas... even coal was a net export with over 80 million short tons for the year, though not as high as in 2012.

Good investors know the numbers...
They also pay attention to productivity enhancing technology and seek out management teams that know how to use it.
Those companies lead the future because the ROI will be higher per employee.

[Biggd]

Originally Posted by John Mercier

Our energy position? We have record net exports in every category except coal. Coal net exports have yet to return to 2012 levels, but that is world demand... not something the US can control.

Our inflation is due to higher labor costs resulting from a smaller workforce... we pay a lot more for trades people... and higher quality/design on the materials side.

We know how to keep housing costs down... we just don't want to.

He tries to turn every thread into a political one!

[Major]

Sorry John, I just don't buy it. You can obfuscate the issue with a lot of words and statistics adjacent to the issue, but the bottom line is that inflation was at 1.4% in January 2020, and after a dramatic increase in fuel costs, spiked to 9+% (probably a lot more than that since key indicators are not included). The inflation was caused by the amount it cost to manufacture and transport goods. The abandonment of our energy independence and the printing of money are the prime drivers of inflation.

[tis]

Originally Posted by Major

Sorry John, I just don't buy it. You can obfuscate the issue with a lot of words and statistics adjacent to the issue, but the bottom line is that inflation was at 1.4% in January 2020, and after a dramatic increase in fuel costs, spiked to 9+% (probably a lot more than that since key indicators are not included). The inflation was caused by the amount it cost to manufacture and transport goods. The abandonment of our energy independence and the printing of money are the prime drivers of inflation.

I totally agree with you. It was like somebody turned off the switch.

[John Mercier]

If it is political, then a waste of time.

If people are serious... the inflation is due to the need to pay much higher wages.

Prices rise when demand is strong...