Semi-rant... Pilots here prob feel the pain as I do...

[mstephenson51]

Bear with me, but I'm getting pretty frustrated with inflation.

Thought I had everything pretty close to being able to pull the trigger on a 60's mooney, hangar, IR training, etc....   Then there was two solid (going on a third) years of over 10% inflation.  dang it!  what the heck does a person do!  so infuriating.  I even started thinking "well maybe I should drain the bulk of my savings to get a CFII rating and feed my aviation while getting paid, but on part time in addition to normal job."  No, that's not a good plan bc I will not recover that investment for a LONG time.  Then I thought, "there's got to be consulting gigs for my skillset out there that I can make real money"  not so much.  I know how to do a lot in small manufacturing company leadership....  BUT people don't seem to need that any more bc not much is made in the states any more.

So what are all you guys doing to help feed the planes in these crappy economic times?  Ideas?

Anyway....  Rant over, thx team!

[mstephenson51]

Yep.  My thoughts exactly.  Its still got a lot more to come.  Its just sad and upsetting to see bad decisions made by others.

[neilpilot]

1 hour ago, mstephenson51 said:

Then there was two solid (going on a third) years of over 10% inflation.

I assume you are saying that the inflation rate over the entire 3 year period is expected to be 10%?  Certainly not 10% each year!

[ilovecornfields]

1 hour ago, mstephenson51 said:

Its just sad and upsetting to see bad decisions made by others.

I think that’s a pretty universal sentiment when someone makes decisions you disagree with. One of the things I’ve noticed in my adult life is that people are absolutely horrible at choosing between two unappealing choices and will often choose the one counterproductive to their long term interests.

I think the last couple of years have been filled with multiple crappy choices and I can’t reasonably claim that if I had been in charge I would have done a better job.

[Utah20Gflyer]

Typically inflation punishes people who trade their labor for money and benefits those who make money from owning assets.  

For example rent goes up but if you have a fixed mortgage on the property then it becomes increasingly profitable.   If you work for wages then typically what ever extra you make gets eaten up by increased cost.  In economic terms they say that wages are "sticky" meaning that wages tend to increase slower than other goods, in particular the ones that are essential.  

As for the official inflation numbers I wouldn't put much faith in them.  Anyone who has been paying attention knows they changed the way they calculate inflation in the 80s so they could screw over retirees, ahem I mean save the government money on COLA increases.  

So how do you deal with inflation?  Convert earned income into investments that do better during inflationary times.   Unfortunately that is a long-term process unless you were born with a trust fund or sold your start up for big dollars.  

Not a investment advisor or economist

[A64Pilot]

All you can do is ride it out, maybe buy a C-140 or something, it’s still flying.

‘Who will be hurt is who is always hurt in these times, I Retired four or five years ago and had programmed into my Retirement plans on surviving a 1929 era depression, so I’ll survive, but not as well as I would have without the inflation.

What has happened is a priority shift in what’s important, keeping oil prices down etc isn’t important anymore, in fact I’d say many are cheering higher oil prices as that will greatly accelerate a shift to “renewables”. Problem is name something that you bought in the last year to include food that wasn’t either produced by burning Diesel and certainly was delivered by burning Diesel.

But what’s going to really hurt is as others have said the greatly increased money supply, it may have made sense in the beginning, but it should have stopped long ago, but didn’t,

We have literally discovered the credit card, we are making x but charging xx. How can that continue? Inflation is the time honored way. It’s how Jimmy Carter got us back on track.  

[DCarlton]

I retired back in Dec 2020.  I'm remember looking at our finances before retiring and joking that as long as we don't have rampant inflation like we did in the 70s, we'll be fine.  And what happened right out of the freakin' gate....  I was also looking seriously at trading up for a newer Mooney... then prices jumped 30-40%.  Now I'm "scared" of the aircraft market.  Yeah I'm frustrated too.  

Edited March 6, 2022 by DCarlton

[GeneralT001]

2 hours ago, bluehighwayflyer said:

The CPI is currently at 7.5 percent per year.  I’m not sure what your source of data is but it is very outdated. The rate of inflation has increased drastically since Covid.

Here in Canada inflation is running at 6% officially and closer to 8% realistically. The political powers have screwed us...I don't see away out of it. Not going to be a good future over the next 10 yrs.

[GeneralT001]

2 hours ago, Utah20Gflyer said:

Typically inflation punishes people who trade their labor for money and benefits those who make money from owning assets.  

For example rent goes up but if you have a fixed mortgage on the property then it becomes increasingly profitable.   If you work for wages then typically what ever extra you make gets eaten up by increased cost.  In economic terms they say that wages are "sticky" meaning that wages tend to increase slower than other goods, in particular the ones that are essential.  

As for the official inflation numbers I wouldn't put much faith in them.  Anyone who has been paying attention knows they changed the way they calculate inflation in the 80s so they could screw over retirees, ahem I mean save the government money on COLA increases.  

So how do you deal with inflation?  Convert earned income into investments that do better during inflationary times.   Unfortunately that is a long-term process unless you were born with a trust fund or sold your start up for big dollars.  

Not a investment advisor or economist

Need to look no further than food or gas prices to know inflation is really well over 10% per year.

[jaylw314]

The US economy is largely a service economy, not a goods-based economy, and it's hard to argue that services were not drastically curtailed for about 18-24 months and still has not really recovered.  To argue that our economy should be right back where we were when this all started would be, quite frankly, some fairly rose-colored glasses.  With the predominance of a service economy, I'm surprised that the last couple years did not end up being outright catastrophic, and I think we'll see repercussions for that for the medium-term future.  Inflation is just one small part of the picture, and it is usually taken in isolation disingenuously.

[Fly Boomer]

4 hours ago, mstephenson51 said:

solid (going on a third) years of over 10% inflation

 

Not seeing 10% between 2020 and 2021.

 

[Air pirate]

Just a few years ago, America was energy independent for the first time in 70+ years.   
 

American manufacturing was returning 

unemployment across all demographics were at there lowest point 

favorable trade deals that benefited America 

Russia and China were in check 

oil is now over $100 per barrel.  It cost more to produce and bring goods to market 

[A64Pilot]

53 minutes ago, jaylw314 said:

The US economy is largely a service economy, not a goods-based economy, and it's hard to argue that services were not drastically curtailed for about 18-24 months and still has not really recovered.  To argue that our economy should be right back where we were when this all started would be, quite frankly, some fairly rose-colored glasses.  With the predominance of a service economy, I'm surprised that the last couple years did not end up being outright catastrophic, and I think we'll see repercussions for that for the medium-term future.  Inflation is just one small part of the picture, and it is usually taken in isolation disingenuously.

But what’s not logical is that pretty much every segment of this service economy is understaffed, people just won’t go back to work, starting salary at the local Pizza Hut is advertised at $15 an hour on the door. My Wife’s school is losing Janitors, even though they get a good retirement and benefits, Target is paying $25 an hour for Janitor's and can’t get them, so the schools Janitors are now Target employees.

Oh and the School system is “critically short” teachers to the tune of over 5,000 unfilled vacancies in Fl. They can’t get bus drivers and Parapro’s either, used to be the bus driver position was cherished and hard to get as it came with all the same benefits as the teachers get for a couple of hours a day work. A guy could be a self employed plumber, welder, carpenter whatever and the Wife drive a bus and get the medical benefits.

So how are all these people who choose to not work surviving, how are they making car payments, rent etc? I can’t believe  unemployment can be it as it is a limited time thing.

[Guest]

5 hours ago, mstephenson51 said:

Yep.  My thoughts exactly.  Its still got a lot more to come.  Its just sad and upsetting to see bad decisions made by others.

The electorate or the elected?

Clarence

[EricJ]

I've always found it interesting that regardless of who people blame for the economy, they're wrong.   

[DCarlton]

42 minutes ago, nosky2high said:

The rule of 72 says we’re in for a long struggle to turn this around. 

FWIW my 67 M20F will be for sale in the summer timeframe of 2025. Hopefully we will still have a country by then. 
 

I'm going experimental from here on out. 
 

https://fee.org/articles/what-does-75-inflation-mean-the-rule-of-72-can-show-you/

I'm considering the same thing.  Build an RV8 to end my flying with a different sort of fun.  Problem is the 12-18 month lead time on kits right now.  Completely insane.  

[GeeBee]

As a retiree, I have to protect my nest egg. When inflation rears its head, I generally look to minerals and oil as they will stay up with inflation. Of course the time to do that was 8 months ago, but you would have to be willfully blind not to see it coming with the Fed's actions coupled with the massive spending bills passed. Exxon Mobil has been a stand out for me with rising some 40% since last summer with the added bonus of what was then 5% on your money dividend. Another standout is Freeport-McMoRan, a mining company also up out 40% since summer. Chevron is up 50% with a similar dividend to Exxon.  I guess my point is when core inflation is up, stick with the core products that are in the earth and going no where until extracted. While inventories and their value of computers, ag products, will rise and fall, and service companies will lose customers, minerals, oil, lumber are stalwarts and track inflation.  In addition, wealth in the ground is always financeable to extract. The wealth of a nation is in the ground, and stick with that wealth when things go crazy.

 

[GeneralT001]

2 hours ago, Air pirate said:

Just a few years ago, America was energy independent for the first time in 70+ years.   
 

American manufacturing was returning 

unemployment across all demographics were at there lowest point 

favorable trade deals that benefited America 

Russia and China were in check 

oil is now over $100 per barrel.  It cost more to produce and bring goods to market 

Yes. All thanks to one Donald Trump. 

[GeneralT001]

1 hour ago, M20Doc said:

The electorate or the elected?

Clarence

The blind leading the blind..................

[jaylw314]

1 hour ago, A64Pilot said:

But what’s not logical is that pretty much every segment of this service economy is understaffed, people just won’t go back to work, starting salary at the local Pizza Hut is advertised at $15 an hour on the door. My Wife’s school is losing Janitors, even though they get a good retirement and benefits, Target is paying $25 an hour for Janitor's and can’t get them, so the schools Janitors are now Target employees.

Oh and the School system is “critically short” teachers to the tune of over 5,000 unfilled vacancies in Fl. They can’t get bus drivers and Parapro’s either, used to be the bus driver position was cherished and hard to get as it came with all the same benefits as the teachers get for a couple of hours a day work. A guy could be a self employed plumber, welder, carpenter whatever and the Wife drive a bus and get the medical benefits.

So how are all these people who choose to not work surviving, how are they making car payments, rent etc? I can’t believe  unemployment can be it as it is a limited time thing.

You kind of answered your own question there

As a manager, there've been three main stories I've heard from people leaving the business:

1. "I don't get paid enough to deal with the s--t I do and didn't realize it until now, so I don't want to work"
2. "I've saved up enough to retire anyway"
3. "I always wanted to be a stay-at-home husband/wife and my partner makes enough"

I think most believe #1 is the most common.  In my experience is that it's actually in increasing order, with #3 the most common, so blame it on the costs of child care and the aging workforce.  All it takes is losing 5% of your workforce to #2 and #3 to cause a labor shortage.  We're experiencing a group of people who previously had little leverage suddenly having more economic power as a result of other people deciding not to work.  I'm unsure if that's a good or bad thing.

[mstephenson51]

7 hours ago, neilpilot said:

I assume you are saying that the inflation rate over the entire 3 year period is expected to be 10%?  Certainly not 10% each year!

depends where you pull data from, I personally do not see how CPI is remotely "real life".  and for those years its not what I meant.  20, 21, and now into 22 are looking pretty big.  Lets look at worldwide average food price for feb to feb.  Its 21% increase.  just one of the many items we all have to buy.  Then consider inflation of the things ppl here in this group want to buy....  PLANES.  ;0)  its basically doubled in price.

Just saying, its a painful problem.

[mstephenson51]

2 hours ago, M20Doc said:

The electorate or the elected?

Clarence

electorate or elected?  YES.

[mstephenson51]

4 hours ago, Fly Boomer said:

 

Not seeing 10% between 2020 and 2021.

 

Buy gas or a house or rent an apartment, buy another plane, or food in TX and you will see 20% since last year alone.

[PT20J]

I don’t think the CPI has much to do with airplane prices. It’s supply and demand and there seem to be a lot of people right now with cash to spend on airplanes and avionics upgrades. Same with houses. It leaves the average wage earner in the dust. 

I know some are buying high performance singles to build time because they want a TBM but can’t get insurance. For them the price is not that important. A few years ago, I rented an immaculately maintained Duchess with full glass panel for my MEI and a few trips. The owner wanted a King Air but couldn’t get insured and bought it as a time builder. Afterwards, he just put it on the rental line rather than selling it.

A home in Bellevue WA recently sold for $1-million over the asking price as a retirement home for a wealthy couple from New York. 

When I lived in the San Francisco Bay Area years ago during a big run up in gas prices a woman from Woodside (a wealthy Bay area enclave) pretty well summed it up. A local TV station had figured out that the Woodside gas station had the most expensive gas in the area and sent a camera crew out to interview people buying gas there. (Slow news day). A middle-aged woman in a big Mercedes gas guzzler was filling up (full service pump) and when asked if she knew this was the most expensive gas around, she replied, “Young man, I suppose some people care what gas costs — I don’t.”

 

 

[steingar]

Never been quite so glad to be broke.