Great article! I am very late to the party but pro tip - you should inform your level of confidence in particular predictions based on your confidence in your skill level at making predictions more broadly. You started the article by saying something to the effect of "I just started making predictions so I am not surprised I got one wrong," but that lack of surprise at being wrong in should have caused you to lower your initial credence in the particular claim you made about inflation.
Embarrassed?!? C'mon, at least you're in the arena!
Nothing embarrassing about being wrong if the underlying logic was clear and defensible. My one quibble is that your Dec 28 inflation prediction did not include the supporting logic in the level of detail you provided here.
Dec 28 made a generic reference to Biden lacking Congressional support. If you'd spelled it out as "Dems may not control Senate and won't be able to deliver BIG stimulus" it would have been obvious pretty quickly that your inflation forecast was headed off the rails.
IOW, even if the forecast was eventually wrong, the argument would have been helpful in terms of telling us what to keep on eye on.
Bonus Quibble: Stock market investors see forecasts all the time, and plenty of forecasters and those who report on them make it a point of comparing past forecasts and results. At a basic level, mutual fund performance figures are a form of back-checking.
Oddly, some sports betting sites and reporters do something similar. Eg, the NY Post sportswriters make their weekly football picks and the paper puts their cumulative score for the year as part of the weekly feature. Or finding a team's record "against the spread" is a widely available method of testing Vegas forecasts. (Of course, Vegas is predicting the betting public's perception of the correct odds, not necessarily their objective odds on a specific match-up. The overlap may NOT be perfect.)
You should keep in mind that you ought to get 90% confidence forecasts “wrong” 10% of the time. So don’t put too much stake in this one outcome, you really need a track record of forecasts to evaluate accuracy.
And you talk about psychology currently having no impact on inflation, yet it appears that industry psychology of seeing all doom and gloom ahead of themselves has caused inflation. I guess there is a delicate balance to both.
I don't think so. The way I've seen the bullwhip effect used is to quantify how demand variability is amplified down the sub-component and supplier production chain due to - mostly - safety stock margin stacking (e.g., my sales forecast is 100 but my demand + safety stock margin order becomes 120). This will creates both capacity bottleneck and excess inventory. I don't think we're seeing the excess inventory part. Barron's called it a demand induced supply shock. I think that fits better.
Your focus appears to be on the shortfall of the producers. Mentioned only in passing is the fact that the economy has been literally stuffed with money by all the stimulus at the state and federal levels. This stimulus has put cash in the hands of people who don't need it, but also into the hands of businesses of all sizes, some of which didn't need it. The inevitable result is inflation of durable goods and services (aka labor).
For durable goods, supply chains do come into play. During the end of 2020, supply chains became very tight as the economy started to accelerate. That new car or washer bought out of available inventory in that period had to be replaced at the dealer, which takes about eight months. If unexpectedly, two cars were bought instead of one, it still takes eight months. When the inventories get low, dealers raise prices. Even used cars have jumped up 17 percent, in the same 12-month period that Hertz was forced to liquidate about 200,000 rental vehicles. As for services, who will perform these services if it is personally advantageous to just stay home until the unemployment benefit runs out in September.
After all, it is summertime. Teachers jump on unemployment every year during the summer months (the Biden extension was a hidden payoff to the unions). Is it any wonder people have money to travel? In fact, they have extra money to travel and they are bidding up the price of rental cars, airplane seats, hotels, fuel, and food. But summer will end.
Back in October, people were saying it would take six to nine months to deliver the vaccines. Guess what? It did.
Quantitative prediction is difficult to get right. But an important component of it is the element of time. In this instance, you may have fallen on your sword too soon. The figures that got your attention were for May. With the 10-year bond yield falling, the financial markets are betting that the 2021 annualized inflation rate will be nowhere near the May figure. But it may not be in your political nature to trust the "hidden hand".
One thing that will cause inflation to persist is more stimulus. If we see more logs thrown on the stimulus fire, all bets are off.
"In my December post “How To Be Less Full of Shit,” one of the quantified predictions I made was a forecast with 90% confidence that year-on-year core inflation would not go over 3% at any point in 2021. On Thursday, the BLS not only reported eye-popping 5% overall inflation (because of gas prices) but core inflation of 3.8% relative to May 2020. In other words, I was wrong about a forecast that I was pretty confident in."
If you had said that in December 2019, you would have been right. The mistake here is not really in your forecast, per se, it's that you forgot the statistical glitch involved when measuring from a government-and-corporation-enforced trough to a 'return to normal'.
What we really need to see here is the TWO year-on-year inflation. (Why is that not reported automatically. Most modern recessions, for dating purposes, only last a year, even though recession effects can last a long time.) We should be comparing June 2021 to June 2019, to see where we are at with core inflation. (Also employment, &c.) Or even ordinary sticker price inflation (CPI with or without food and fuel).
"Since this is my first year making quantified forecasts, I am not all that surprised that I blew this one, and I bet my overall forecasting track record for the year will be pretty bad. The point of committing yourself to quantitative forecasts is to get better at it, but what happens right now is it’s really only done by a small and obscure group of people who are unusually good at forecasting. So the risk of trying it for someone who’s new to the game (like me) is that you are going to end up embarrassing yourself, including on topics that are close to your core area of coverage. But I am hoping that you, the gentle reader, will appreciate honesty because I really would like to encourage more people in the punditry game to follow in my footsteps here."
Shit happens dude. Much of the inflation rate hype on the bidness propaganda channels was pre-programmed bullshit anyway. (There's a Democrat in office. If Trump had won, they'd be talking up the wonders of the economy even though the results would be fairly closely similar.) We're arguing about single numbers that are tuned and cherry-picked to influence the discourse. Most of the columns about the economy are basically tuning in from la-la land and bear no relation to reality and can be ignored.
So you're out here competing with Krugman and a handful of other people.
"Biden has thus far kept all of the Trump administration’s trade measures in place, including tariffs on steel and aluminum that make it more expensive to build cars."
I have no freaking idea why. (Is there some reason we need to tax French cheese? Is there any reason whatsoever to tariff ag products? Land - they ain't makin' more of it.) Keep the Chinese tariffs and ditch the rest. Same drill as with sending vaccines to foreign countries - for one thing, so we can remake friends.
"Median CPI normally says inflation is higher than conventional estimates suggest, so unless you were consistently citing it pre-pandemic, I don’t think you have much authority to switch to it now."
As a matter of good practice (and probably bad punditry) you should cite several different measures of the same thing regularly.
"Today’s component analysis debunkers sometimes strike me as doing the opposite thing — obviously if you strip out the prices that are rising inflation looks lower!Today’s component analysis debunkers sometimes strike me as doing the opposite thing — obviously if you strip out the prices that are rising inflation looks lower!"
Enh. If you are allowed to cherry-pick just one piece of data you can make up any old fairytale you want. Right now, rich people (investor class types) are not price/demand-constrained at all, and they apparently all want new McMansions. Poorer people range from slightly constrained to profoundly constrained. But we have really have shortages in lumber and CPUs and a demand-induced squeeze on oil (gas).
But total employment is still down, and a lot of shut-down enterprises are only now spinning back up so you would want to drop out the squeezed industries to see what else is going on. (Not much.) Gonna take awhile to level out.
"When I wrote about inflation contrarians, I complained that during the period of low inflation you had a bunch of people essentially saying “if you only pay attention to prices that are going up faster-than-average then there’s a lot of inflation.”"
When 2008 and happened, and the recession was, there WAS an inflation spike. Sarah Palin complained incoherently, all the D pundit types said, 'No way!' and so when I pointed out that there was a manufacturer-shift going on in retail, and (centristy) people got all mad at me. ('Got all mad at me' - repeated hacking attempts, threats, the usual.)
(The manufacturer shift was that various industries decided consumers were going to super price-sensitive going forward, so they changed their base package sizes - the standard 5-pound bag of flour became the standard 4-pound bag of flour, retailing for roughly the same face value, and an effective 20-25% increase in cost per pound. That happened almost across the board, so there was a one-time spike in inflation as the hedonic adjustments were made, even while mass unemployment was a fact on the ground that hadn't yet appeared in the data. Now we're going the other way - and anytime there's a buying panic (think toilet paper in March 2020!) you going to get some kind of dose of inflation. Price falls, even large ones, usually don't get the same headlines, except in financial markets.)
"But I think to keep inflation non-worrisome, you want to see the government worrying about it a little. It makes me nervous when I see people dive too deep into the component analysis and say “well if you throw out food and energy and used cars and transportation services, then it all looks pretty normal.”"
What should worry you is that the business propaganda channels are attempting to drive inflation expection psychology by repeatedly pushing the notion that we live in fucking Zimbabwe because Congress passed a relief bill and the price of lumber spiked due to a production squeeze. The usual suspects ran the same scam in 1993 and 2009.
The correct response is, '... Nah.'
elm
🎼🎹nobody cares about the reeeee-vvviiiiiii-SIONS 🎶
You give a lot of good reasons that *in December*, you didn't expect ARP to be as large as it was, which was why you underrated the risk of inflation. But in February, you said it was sized appropriately: https://www.slowboring.com/p/full-employment
"It is unlikely that we will see high inflation (above 3%, say) this year" (I'm not sure if you meant YOY here)
These things aren't necessarily in contradiction with one another, but I just want to understand what the through line is. Is it that even *if* you foresaw inflation would be higher, you would still have supported the same $1.8T? Do you still think concerns about the mismatch with the output gap were wrong? Is the answer to both of these related to *when* the $1400 got paid out?
Is it logically consistent to say you're predicting something with 90% confidence, and then later say you're "not surprised" that prediction turned out to be wrong? (Honest, admittedly trivial question.)
That's true, but generally forecasters do overestimate probabilities and supposedly rare things happen a lot more often than "expected." Tetlock's book on Superforecasting is really good on this and other forecasting foibles.
I am curious as to what’s going to happen with wages in the next year. I think there will be more pressure on service sector wages, but with the remote working thing... I don’t see as big an increase for middle/upper class wages.
Will we get wage compression? Or will inflation push company and corporations to give significant cost of living wages?
Well a few companies are saying that if people relocate to lower cost of living places they will adjust wages. Additionally, company may consider working from home a perk. What I see, is companies start to reward employees are coming to the office with bonuses or are higher pay
Love your analysis generally, but the main reason you missed on inflation is because you like the stimulus. Same reason a conservative would miss on any negative effects of a tax cut. There are no free lunches.
Like most journalists, when Kevin Drum uses jargon he does not not understand (MRP) and does so in an an offhand way intended to suggest he does he is wrong. He very clearly does not understand what that means and what it is used for. Furthermore the idea that one simply does an economic forecast with their abysmal record of getting things right and scores a hit every time is extremely foolish. Parenthetically ask a journalist what Planned Obsolescence means and they have about a 100 percent record of getting it wrong.
Automobile manufacturers do have some tried and true statistics for estimating future demand for their product. The most important is probably the average age of the fleet currently on the road. And it just set a new record. The idea that this would instantly translate into sales is not a given. If you've been watching this industry over the last few years you might have noticed that quite a few plants dedicated to small sedan production have been shuttered for the very obvious reason that they couldn't give the damn things away and profit margins on them were low. CAFE standards be damned. If people will not buy them you can't force them to. Which brings us to now.
What exactly were auto manufacturers supposed to have foreseen? Overall demand or which particular models were going to be in demand? I ask because if you were going to use MRP to schedule production in a JIT environment then you have to guess right. If you issue a PO and order parts you are going to get them barring unforeseen supply chain problems. And you had better need them otherwise you are going to pay a lot of money to warehouse stuff you don't need. Manufacturers have been destroyed by guessing wrong.
While I'm generally sympathetic to this post, I'm concerned that the remedies it proposes may be a bit performative and signalling rather than actual solutions to diagnosed problems. Take home buying inflation Matt cites. It's certainly been real this past year. But calling on the Biden administration to focus on (inter alia) zoning reform is totally performative. Even if it's a good idea, it's much more likely than not to have no discernible impact on housing prices in the near-term and, I'd say, the medium term. Or car production. Will relaxing the Trump tariffs affect car production and prices? Maybe; cars are made of metal. But unless we have a full diagnosis of what's causing the price increases, it may do little to nothing. Say that car shortages are totally a product of semiconductor bottlenecks. Cut steel/aluminum tariffs as much as you like, but don't expect to see significant increases in supply.
It may be that you have to be aware of the limits in what you can do and just take a more wait and see attitude. Don't just do anything; sit there!
Great article! I am very late to the party but pro tip - you should inform your level of confidence in particular predictions based on your confidence in your skill level at making predictions more broadly. You started the article by saying something to the effect of "I just started making predictions so I am not surprised I got one wrong," but that lack of surprise at being wrong in should have caused you to lower your initial credence in the particular claim you made about inflation.
You better buy into real estate. Prices are just going to keep going up. Fixed supply, a billion people on the way. :-)
Embarrassed?!? C'mon, at least you're in the arena!
Nothing embarrassing about being wrong if the underlying logic was clear and defensible. My one quibble is that your Dec 28 inflation prediction did not include the supporting logic in the level of detail you provided here.
Dec 28 made a generic reference to Biden lacking Congressional support. If you'd spelled it out as "Dems may not control Senate and won't be able to deliver BIG stimulus" it would have been obvious pretty quickly that your inflation forecast was headed off the rails.
IOW, even if the forecast was eventually wrong, the argument would have been helpful in terms of telling us what to keep on eye on.
Bonus Quibble: Stock market investors see forecasts all the time, and plenty of forecasters and those who report on them make it a point of comparing past forecasts and results. At a basic level, mutual fund performance figures are a form of back-checking.
Oddly, some sports betting sites and reporters do something similar. Eg, the NY Post sportswriters make their weekly football picks and the paper puts their cumulative score for the year as part of the weekly feature. Or finding a team's record "against the spread" is a widely available method of testing Vegas forecasts. (Of course, Vegas is predicting the betting public's perception of the correct odds, not necessarily their objective odds on a specific match-up. The overlap may NOT be perfect.)
You should keep in mind that you ought to get 90% confidence forecasts “wrong” 10% of the time. So don’t put too much stake in this one outcome, you really need a track record of forecasts to evaluate accuracy.
The rationale that rising prices are just regaining ground from last year…2020 inflation wasn’t negative, CPI was 1.4 %.
Yes, CPI was positive for all of 2020, but current 12 month inflation is being measured against May and June 2020 when prices were at the bottom
Tired: the lender of last resort
Wired: the car dealer of last resort
Isn't this the bullwhip effect on steroids (regarding cost of durable goods going up and a supply issue) https://www.cips.org/knowledge/procurement-topics-and-skills/operations-management/bullwhip-effect-in-supply-chain/ ?
And you talk about psychology currently having no impact on inflation, yet it appears that industry psychology of seeing all doom and gloom ahead of themselves has caused inflation. I guess there is a delicate balance to both.
I don't think so. The way I've seen the bullwhip effect used is to quantify how demand variability is amplified down the sub-component and supplier production chain due to - mostly - safety stock margin stacking (e.g., my sales forecast is 100 but my demand + safety stock margin order becomes 120). This will creates both capacity bottleneck and excess inventory. I don't think we're seeing the excess inventory part. Barron's called it a demand induced supply shock. I think that fits better.
Your focus appears to be on the shortfall of the producers. Mentioned only in passing is the fact that the economy has been literally stuffed with money by all the stimulus at the state and federal levels. This stimulus has put cash in the hands of people who don't need it, but also into the hands of businesses of all sizes, some of which didn't need it. The inevitable result is inflation of durable goods and services (aka labor).
For durable goods, supply chains do come into play. During the end of 2020, supply chains became very tight as the economy started to accelerate. That new car or washer bought out of available inventory in that period had to be replaced at the dealer, which takes about eight months. If unexpectedly, two cars were bought instead of one, it still takes eight months. When the inventories get low, dealers raise prices. Even used cars have jumped up 17 percent, in the same 12-month period that Hertz was forced to liquidate about 200,000 rental vehicles. As for services, who will perform these services if it is personally advantageous to just stay home until the unemployment benefit runs out in September.
After all, it is summertime. Teachers jump on unemployment every year during the summer months (the Biden extension was a hidden payoff to the unions). Is it any wonder people have money to travel? In fact, they have extra money to travel and they are bidding up the price of rental cars, airplane seats, hotels, fuel, and food. But summer will end.
Back in October, people were saying it would take six to nine months to deliver the vaccines. Guess what? It did.
Quantitative prediction is difficult to get right. But an important component of it is the element of time. In this instance, you may have fallen on your sword too soon. The figures that got your attention were for May. With the 10-year bond yield falling, the financial markets are betting that the 2021 annualized inflation rate will be nowhere near the May figure. But it may not be in your political nature to trust the "hidden hand".
One thing that will cause inflation to persist is more stimulus. If we see more logs thrown on the stimulus fire, all bets are off.
"In my December post “How To Be Less Full of Shit,” one of the quantified predictions I made was a forecast with 90% confidence that year-on-year core inflation would not go over 3% at any point in 2021. On Thursday, the BLS not only reported eye-popping 5% overall inflation (because of gas prices) but core inflation of 3.8% relative to May 2020. In other words, I was wrong about a forecast that I was pretty confident in."
If you had said that in December 2019, you would have been right. The mistake here is not really in your forecast, per se, it's that you forgot the statistical glitch involved when measuring from a government-and-corporation-enforced trough to a 'return to normal'.
What we really need to see here is the TWO year-on-year inflation. (Why is that not reported automatically. Most modern recessions, for dating purposes, only last a year, even though recession effects can last a long time.) We should be comparing June 2021 to June 2019, to see where we are at with core inflation. (Also employment, &c.) Or even ordinary sticker price inflation (CPI with or without food and fuel).
"Since this is my first year making quantified forecasts, I am not all that surprised that I blew this one, and I bet my overall forecasting track record for the year will be pretty bad. The point of committing yourself to quantitative forecasts is to get better at it, but what happens right now is it’s really only done by a small and obscure group of people who are unusually good at forecasting. So the risk of trying it for someone who’s new to the game (like me) is that you are going to end up embarrassing yourself, including on topics that are close to your core area of coverage. But I am hoping that you, the gentle reader, will appreciate honesty because I really would like to encourage more people in the punditry game to follow in my footsteps here."
Shit happens dude. Much of the inflation rate hype on the bidness propaganda channels was pre-programmed bullshit anyway. (There's a Democrat in office. If Trump had won, they'd be talking up the wonders of the economy even though the results would be fairly closely similar.) We're arguing about single numbers that are tuned and cherry-picked to influence the discourse. Most of the columns about the economy are basically tuning in from la-la land and bear no relation to reality and can be ignored.
So you're out here competing with Krugman and a handful of other people.
"Biden has thus far kept all of the Trump administration’s trade measures in place, including tariffs on steel and aluminum that make it more expensive to build cars."
I have no freaking idea why. (Is there some reason we need to tax French cheese? Is there any reason whatsoever to tariff ag products? Land - they ain't makin' more of it.) Keep the Chinese tariffs and ditch the rest. Same drill as with sending vaccines to foreign countries - for one thing, so we can remake friends.
"Median CPI normally says inflation is higher than conventional estimates suggest, so unless you were consistently citing it pre-pandemic, I don’t think you have much authority to switch to it now."
As a matter of good practice (and probably bad punditry) you should cite several different measures of the same thing regularly.
"Today’s component analysis debunkers sometimes strike me as doing the opposite thing — obviously if you strip out the prices that are rising inflation looks lower!Today’s component analysis debunkers sometimes strike me as doing the opposite thing — obviously if you strip out the prices that are rising inflation looks lower!"
Enh. If you are allowed to cherry-pick just one piece of data you can make up any old fairytale you want. Right now, rich people (investor class types) are not price/demand-constrained at all, and they apparently all want new McMansions. Poorer people range from slightly constrained to profoundly constrained. But we have really have shortages in lumber and CPUs and a demand-induced squeeze on oil (gas).
But total employment is still down, and a lot of shut-down enterprises are only now spinning back up so you would want to drop out the squeezed industries to see what else is going on. (Not much.) Gonna take awhile to level out.
"When I wrote about inflation contrarians, I complained that during the period of low inflation you had a bunch of people essentially saying “if you only pay attention to prices that are going up faster-than-average then there’s a lot of inflation.”"
When 2008 and happened, and the recession was, there WAS an inflation spike. Sarah Palin complained incoherently, all the D pundit types said, 'No way!' and so when I pointed out that there was a manufacturer-shift going on in retail, and (centristy) people got all mad at me. ('Got all mad at me' - repeated hacking attempts, threats, the usual.)
(The manufacturer shift was that various industries decided consumers were going to super price-sensitive going forward, so they changed their base package sizes - the standard 5-pound bag of flour became the standard 4-pound bag of flour, retailing for roughly the same face value, and an effective 20-25% increase in cost per pound. That happened almost across the board, so there was a one-time spike in inflation as the hedonic adjustments were made, even while mass unemployment was a fact on the ground that hadn't yet appeared in the data. Now we're going the other way - and anytime there's a buying panic (think toilet paper in March 2020!) you going to get some kind of dose of inflation. Price falls, even large ones, usually don't get the same headlines, except in financial markets.)
"But I think to keep inflation non-worrisome, you want to see the government worrying about it a little. It makes me nervous when I see people dive too deep into the component analysis and say “well if you throw out food and energy and used cars and transportation services, then it all looks pretty normal.”"
What should worry you is that the business propaganda channels are attempting to drive inflation expection psychology by repeatedly pushing the notion that we live in fucking Zimbabwe because Congress passed a relief bill and the price of lumber spiked due to a production squeeze. The usual suspects ran the same scam in 1993 and 2009.
The correct response is, '... Nah.'
elm
🎼🎹nobody cares about the reeeee-vvviiiiiii-SIONS 🎶
You give a lot of good reasons that *in December*, you didn't expect ARP to be as large as it was, which was why you underrated the risk of inflation. But in February, you said it was sized appropriately: https://www.slowboring.com/p/full-employment
And even after it passed in March, you said inflation would be mild: https://www.slowboring.com/p/inflation-coming
"It is unlikely that we will see high inflation (above 3%, say) this year" (I'm not sure if you meant YOY here)
These things aren't necessarily in contradiction with one another, but I just want to understand what the through line is. Is it that even *if* you foresaw inflation would be higher, you would still have supported the same $1.8T? Do you still think concerns about the mismatch with the output gap were wrong? Is the answer to both of these related to *when* the $1400 got paid out?
Is it logically consistent to say you're predicting something with 90% confidence, and then later say you're "not surprised" that prediction turned out to be wrong? (Honest, admittedly trivial question.)
I would say it is. Things with a 1 in 10 chance of happening happen all the time.
That's true, but generally forecasters do overestimate probabilities and supposedly rare things happen a lot more often than "expected." Tetlock's book on Superforecasting is really good on this and other forecasting foibles.
https://www.amazon.com/Superforecasting-Science-Prediction-Philip-Tetlock/dp/0804136718
I should say that they overestimate their certainty, to a surprisingly large degree.
I am curious as to what’s going to happen with wages in the next year. I think there will be more pressure on service sector wages, but with the remote working thing... I don’t see as big an increase for middle/upper class wages.
Will we get wage compression? Or will inflation push company and corporations to give significant cost of living wages?
Do you feel like more folks being remote will keep professional class wages down?
Well a few companies are saying that if people relocate to lower cost of living places they will adjust wages. Additionally, company may consider working from home a perk. What I see, is companies start to reward employees are coming to the office with bonuses or are higher pay
Love your analysis generally, but the main reason you missed on inflation is because you like the stimulus. Same reason a conservative would miss on any negative effects of a tax cut. There are no free lunches.
Like most journalists, when Kevin Drum uses jargon he does not not understand (MRP) and does so in an an offhand way intended to suggest he does he is wrong. He very clearly does not understand what that means and what it is used for. Furthermore the idea that one simply does an economic forecast with their abysmal record of getting things right and scores a hit every time is extremely foolish. Parenthetically ask a journalist what Planned Obsolescence means and they have about a 100 percent record of getting it wrong.
Automobile manufacturers do have some tried and true statistics for estimating future demand for their product. The most important is probably the average age of the fleet currently on the road. And it just set a new record. The idea that this would instantly translate into sales is not a given. If you've been watching this industry over the last few years you might have noticed that quite a few plants dedicated to small sedan production have been shuttered for the very obvious reason that they couldn't give the damn things away and profit margins on them were low. CAFE standards be damned. If people will not buy them you can't force them to. Which brings us to now.
What exactly were auto manufacturers supposed to have foreseen? Overall demand or which particular models were going to be in demand? I ask because if you were going to use MRP to schedule production in a JIT environment then you have to guess right. If you issue a PO and order parts you are going to get them barring unforeseen supply chain problems. And you had better need them otherwise you are going to pay a lot of money to warehouse stuff you don't need. Manufacturers have been destroyed by guessing wrong.
Can we expect any other retrospectives on your predictions? I’m particularly curious about your Lloyd Austin prediction
While I'm generally sympathetic to this post, I'm concerned that the remedies it proposes may be a bit performative and signalling rather than actual solutions to diagnosed problems. Take home buying inflation Matt cites. It's certainly been real this past year. But calling on the Biden administration to focus on (inter alia) zoning reform is totally performative. Even if it's a good idea, it's much more likely than not to have no discernible impact on housing prices in the near-term and, I'd say, the medium term. Or car production. Will relaxing the Trump tariffs affect car production and prices? Maybe; cars are made of metal. But unless we have a full diagnosis of what's causing the price increases, it may do little to nothing. Say that car shortages are totally a product of semiconductor bottlenecks. Cut steel/aluminum tariffs as much as you like, but don't expect to see significant increases in supply.
It may be that you have to be aware of the limits in what you can do and just take a more wait and see attitude. Don't just do anything; sit there!