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The $25k car is going extinct?

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319 points pseudolus | 5 comments | 29 Jun 25 15:59 UTC | HN request time: 0.001s | source
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slg ◴[30 Jun 25 04:28 UTC] No.44419379[source]▶
I don't know why inflation is dismissed so quickly. The article lists the industry average price increase as 29.2% and the inflation value I got out of the US Bureau of Labor Statistics calculator[1] was 26.2%. So sure, "this isn’t just a case of inflation affecting the entire vehicle market" [emphasis mine], but it is mostly that.

[1] - https://www.bls.gov/data/inflation_calculator.htm

replies(1): >>44419788 #
dingaling ◴[30 Jun 25 05:36 UTC] No.44419788[source]▶
Retail inflation is based on the prices of goods, including new cars.

So it's pointless to compare car prices to inflation because they are part of the basis of the measure. Hence why they track closely.

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anon7000 ◴[30 Jun 25 05:46 UTC] No.44419835[source]▶
Then it’s pointless to compare nearly anything to inflation, which means inflation isn’t very useful. You can still find many product categories increasing in price more slowly than inflation. Some much higher than inflation. So it is useful to compare inflation
replies(1): >>44419848 #
ajkjk ◴[30 Jun 25 05:48 UTC] No.44419848[source]▶
But the question we're asking is why the price of cars went up. "Inflation" isn't an answer. Inflation is what we call the price of cars going up. It still happens for a reason...
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scotty79 ◴[30 Jun 25 07:04 UTC] No.44420333[source]▶
Inflation is a result of too much money being created than what is needed by the growth of the economy. Average price increase that we use to estimate it is just a useful proxy.

Inflation is always the main contribution to price increase. It only makes sense to compare price raise above or below inflation if you want to unearth factors specific to any given product or industry.

replies(2): >>44422043 #>>44426440 #
1. habnds ◴[30 Jun 25 11:39 UTC] No.44422043[source]▶
Inflation is completely possible with no change in money supply. This is handled in economics with the idea of the "velocity of money" which conceptually captures the large range of factors by which prices can increase due to factors beyond money supply, for example an energy price shock or changing consumer and business expectations that result in changes in spending and investment patterns.
replies(2): >>44423135 #>>44431640 #
2. weberer ◴[30 Jun 25 13:38 UTC] No.44423135[source]▶
In theory, sure. But in practice the money supply has nearly quadrupled since 2005.

https://www.investopedia.com/terms/m/m2.asp

https://fred.stlouisfed.org/series/M2SL

replies(1): >>44428708 #
3. habnds ◴[30 Jun 25 22:41 UTC] No.44428708[source]▶
$1 in Jan 2005 is only 1.69 today, not $4 because the velocity of money has decreased dramatically as it has pooled towards the top of the income/wealth spectrum where it doesn't get spent or productively invested.
replies(1): >>44464730 #
4. scotty79 ◴[01 Jul 25 07:56 UTC] No.44431640[source]▶
> Inflation is completely possible with no change in money supply.

Money supply always changes. But yes, inflation is possible without changing money supply, if for example economy shrinks or there's some process that reactivated dormant capital that people had just sitting around and not being used by the economy.

In the end it's always the same thing. More money than it should be. It's just that "should be" is very complex and "more money" only a little bit simpler.

5. scotty79 ◴[04 Jul 25 14:09 UTC] No.44464730{3}[source]▶
Bulk of it is that, but some of it is that larger economy needs more money to run. So while there was 4 food money supply increase the legitimate demand also increased somewhat. Exact numbers might be hard to pinpoint because we tend to measure economy in dollars but still it wouldn't be $4 even if the rich didn't get disproportionately wealthy from this supply.