Yahoo Finance’s Brian Sozzi, Myles Udland, Julie Hyman, and Rick Newman discuss where inflation is rising, and where it’s not.
JULIE HYMAN: We've been talking a lot about prices, of course. We talked at the top of the hour about lumber prices and prices for some other goods that actually have been coming down a little bit, but there are also some prices that never really went up much in the first place, which is also equally fascinating. Rick Newman has been tracking some of those categories.
And, Rick, one of the categories is rent. And I assume part of that has to do with the sort of eviction moratorium and some of the regulation of this stuff. But what are some of the dynamics around it? And what's happening now with these prices?
RICK NEWMAN: I mean, we've got all kinds of disruptions related to the pandemic. Yes, I think some of it has to do with regulations. Rents during the last 12 months up only 1.8%.
We talk a lot about housing costs. If you're trying to buy a home, it's tough, because home prices are up around 13% or 14%, but rents are not. And part of that is probably people moving around. I mean, if more people are trying to buy, which they are, because of low interest rates, that means fewer people are trying to rent.
And we know that in some big cities like New York, and Chicago, and LA, people have been leaving the city. So rents have been falling. Some other things that are coming down or at least not going up by very much, Julie, medical care is up only 0.9% during the last 12 months, college tuition up only 0.3%, and computer services and computer hardware barely changed in prices at all. So people are getting a break on some things, just not some of those headline things, like used cars and rental cars.
JULIE HYMAN: And one of the other things that stood out to me is that child care costs have not been going up. And to me, I mean, the reason for that, at least, to me seems obvious. I don't know if you're reporting differently, but it's that, you know, if moms, and parents, and dads for that matter, are still home with their kids, then the demand for child care has gone down.
RICK NEWMAN: Yeah, right. So all these distortions, and they are going to sort themselves out. So if we are going to start seeing higher prices for child care-- and by the way, just because the price has not changed very much during the last year, that doesn't mean it's cheap. It's not, but, you know, if we do see more people going back to work, you think daycare and child care expenses will go up.
But by the same token, some of these other huge price increases ought to moderate. You just mentioned lumber. I think car prices for sure are going to stabilize as the semiconductor shortage gets worked out. And this, this does underscore the argument that inflation is probably transitory.
That's the word we're all using now. What is transitory mean? Is it two months, six months, eight? I would guess around six months, but my guess is we're going to see a return to normalcy in the pricing of most things by the end of 2021.
BRIAN SOZZI: Rick Newman, in the transitory inflation bucket-- I mean, Rick, so we're looking at second half deflation.
RICK NEWMAN: Well, think about this. So, you know, we've been talking about base effects. So one of the reasons we're seeing a large price increases in some categories is because demand fell off a cliff a year ago.
So prices were depressed if you're doing it on a year-over-year basis. But if prices are now sort of exaggerated at artificially high levels, what's it going to look like a year from now? I think we could have the opposite of the base effects we're having now, which is we could have-- I don't know if we'll have deflation. But, yeah, I mean, overall we could.
We could see it probably in some of these categories, at least, because if prices are artificially high, because of shortages now, when that works itself out, the market's going to rectify itself and prices are going to come down. So I think there's going to look a lot better in a year or so. And by the way, I think that's good news for President Biden. I don't think inflation is going to be a problem for him in 2022 when everybody's gearing up for those important midterm elections.
MYLES UDLAND: Rick, you take a vacation this summer, what's your inflationary impulse looking like at this point?
RICK NEWMAN: I just got back from the Beach, Myles. I can't believe you didn't miss me. I was gone for a whole week. I wasn't on your show. What the heck were you doing?
MYLES UDLAND: I mean, Rick, long gone are the days-- long gone are the days where you have a standing one hour reservation with myself and Jen Rogers. So I got to say, don't really keep track of your whereabouts. How are prices down there? How is how is the staffing situation?
RICK NEWMAN: You know, they were understaffed. So I went to Cape May in New Jersey. They were definitely understaffed restaurants.
There were definitely a lot of help wanted signs, but, you know, aside from delays for food and a few things, I mean, at least the stores were mostly open. I'm actually looking forward to when that federal unemployment aid expires in September and we actually get to find out, is that really keeping people out of the workforce, or are we going to see this flood of people back into these restaurant jobs and things like that? Of course, by then it might be too late to tell at the beach, but we're able to tell in New York City or maybe in your neighborhood, Myles.
JULIE HYMAN: We'll see what happens. So next time that Myles goes on a vacation, we'll have to get his report from on the ground as well. Maybe we'll have him do a--
RICK NEWMAN: You need to have a vacation inflation blog.
JULIE HYMAN: Oh, I like it. I like it. We should get all the staff to do that. That is--
RICK NEWMAN: And by way, I drove my car. And I did not have to rent a car. So that's one big price increase I didn't have to deal with.
JULIE HYMAN: Yes. All right. How's saltwater taffy prices?