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Inflation for real families

Original post made by Keri on Oct 2, 2012

I went down to my local grocery store, today, and purchased a typical basket of groceries. I was shocked! I have also been forced to buy gasoline at well over four dollars per gallon. How did this happen, while we are being told that inflation is not an issue?

I think inflation is conflated into an overall algorithym, including the deflation of housing prices, but this does not compute for most of us.

Most of us are seeing that we are in the middle of a major inflationary period. I am worried that we are facing a hyper-inflationary period. As a mother of two kids, I am very concerned.

Comments (58)

Posted by Exxon, a resident of Adobe-Meadows
on Oct 2, 2012 at 7:57 pm

High gas prices are a conspiracy between the oil companies and the Republicans. They shut down refineries all over California to limit supply and they are also exporting a lot of gas and oil from California to Asia and South America to boost their profits. Don't expect much relief until after the election.


Posted by Keri, a resident of South of Midtown
on Oct 2, 2012 at 8:23 pm

Exxon,

I don't know about any conspiracies, as much as you believe in them. I just know that our family cost of living is skyrocketing, and I am talking about everyday family issues. Last year, our combined family gross income was $88k. We play it very tight, with no expensive vacations, no restaurant dinners, yet we are getting killed by inflation.

Are there others, in this region who are feeling it like we do?


Posted by Concerned, a resident of Another Palo Alto neighborhood
on Oct 2, 2012 at 9:08 pm

Oil prices are a combination of the special blend of gasoline required in California, several refinery shutdowns, and the normal increased demand for gas for travel in the summer time.

Bad corn crops also figure in because some corn is needed for mandated ethanol.

Higher gas prices increase food costs because agriculture is quite mechanized, feed crops have to be shipped, as do fruits and vegetables.

Food prices are also up because the same drought and flood conditions that affected corn affected most other crops, like fruit and vegetables. Corn is also used as feed for cattle, so scarce corn drives up prices for meat. Corn is used in more foodstuffs than you realize...check the ingredient-labeling on your groceries.

And so on...

Not much anyone can do about the weather.


Posted by Hyper hyperbole, a resident of Barron Park
on Oct 2, 2012 at 10:33 pm

" I am worried that we are facing a hyper-inflationary period. As a mother of two kids, I am very concerned."

Hyper-inflation? You mean like in Germany in the 20's when prices doubled every few days? We are currently nowhere near the inflation rate of the early '80s and even that was nowhere near "hyperinflation". I think we've all been lulled by such a long period of minimal inflation that we don't comprehend what "real" inflation is like.


Posted by Mac, a resident of Green Acres
on Oct 3, 2012 at 10:10 am

Snore.

Inflation is at a near low. Want energy to be cheaper? Move fleets to NG and put solar on every roof.

Food. It's a drought in 2/3rds of the US. Been in all the papers. Try picking one up.

Snore.

Oh yeah, I forgot the purpose of this thread.... slowly bring Obama into the thread as the culprit. His fault, because he is not one of "us", not a REAL American.

my bad..............


Posted by palo alto mom, a resident of Duveneck/St. Francis
on Oct 3, 2012 at 10:21 am

Keri - food prices are up for a number of non-inflationary reasons including weather, shipping costs for gas, etc. In addition, due to the additional resources spent on preventing our "temporary agriculture workers" from being employed, cost will go even high because some crops can't get picked and some are not longer being planted because they are too labor intensive.

Good luck to you and your family!


Posted by common sense, a resident of Midtown
on Oct 3, 2012 at 10:33 am

Prices have gone up for gas, utilities, and food. If you have a job in the South Bay Area (Sunnyvale, Santa Clara), there are gas stations where the prices are 15 - 20 cents cheaper.

Same for food - a Marina Supermarket, Ranch 99, or Cash & Carry for veggies....

Utilities is a tough one, as there is no alternative to the City run utilities.


Posted by Complainers, a resident of Midtown
on Oct 3, 2012 at 10:57 am

Folks, you have it so good, quit complaining. If you lived in Spain or any European country right now prices are going sky high compared to what we are experiencing,

We are now in a world economy what is happening in this country is not Obama's fault, even China's economy is faltering. What is happening now is miniscule compared to what will happen in 3 to 4 years from now.


Posted by Hmmm, a resident of East Palo Alto
on Oct 3, 2012 at 12:15 pm

These comments are smart & varied. It's not inflation. To deal w/your budget, try couponing if that suits your lifestyle. Join food co-ops, eat less packaged whenever possible & eat more vegetarian meals. I know it's unsolicited advice, but if you like any of it, try it out.


Posted by Jan H, a resident of Old Palo Alto
on Oct 3, 2012 at 2:53 pm

Our combined family inco e is about $300,000. No brag, just fact. BUT, the local real estate agents treat us like losers because we cannot afford a house more expensive than $1.3 million, which buys a small, junky house on a sub-standard size lot in the first block of a street off a very busy street near the railroad track!

The local restaurants treat us like losers because we buy our clothes at Target. Yes, we have nice cars, but they were bought used.

My husband has a graduate degree in economics and owns his own firm, but the banks, the medical insurance companies, and the neighbors treat us like losers because he does not take an obscene salary, takes large pay cuts before giving his employees small ones, and restores the pay cuts to employees before restoring them to himself.
He is treated like a loser because his company only employs 20 people, so he does not get good rates from insurance companies or banks. Most of the. O ey he makes goes back into the company, not our bank account.

What is wrong with this country,, this state, and especially, this city???! We are struggling with the price of housing (we have 4 adults, one small child living in a 3 bdrm, 2 ba house...need a larger one), gas, utilities, and food. We actually make less now than we did in 1999! Our standard of living has tanked, while we watch young people in their twenties in the same industry build huge custom houses on large lots, have multiple children, and all on one hyper inflated income!

Sometimes I feel we are being punished for doing the right thing, putting family and employees first. And for not doing anything illegal by SEC rules, as I have seen many people in the same Silicon Valley Area (yes, some in PA) do.

Our income would be a very good one anywhere but Palo Alto. Here, we are criticized, even ostracized, because we haven't "bettered" ourselves in the ways they think appropriate, i.e, whatever it takes to make boatloads of dough, however unethical.

Between the snobs, the cheats, the ineffectual city council, the ugly buildings going up, the cuts in city services, and the huge increase in crime, I don't want to live here any more
Reprinted
E illy, this




Posted by SushiFix, a resident of Barron Park
on Oct 3, 2012 at 5:39 pm


Jan: I don't really know what your problem is - 300K sounds like you have it made.


Speaking of food, inflation, restaurants, etc., does anyone know why Miyaki closed down?


Posted by no hummus for you, a resident of Crescent Park
on Oct 3, 2012 at 5:44 pm

And worst of all,Jan, you cannot get served at oren's hummus. Maybe it had nothing to do with how you look. You should consider moving since Palo alto is so evil.


Posted by Jan H., a resident of Old Palo Alto
on Oct 3, 2012 at 7:26 pm

Jan H. is a registered user.

BTW, no hummus for you, my father was a German Jew. Just so you know, I had to deal with all THAT I plies growing up!


Posted by Jan H., a resident of Old Palo Alto
on Oct 3, 2012 at 7:27 pm

Jan H. is a registered user.

...and I am moving, so there!!!


Posted by no hummus for you, a resident of Crescent Park
on Oct 3, 2012 at 7:43 pm

We will miss you Jan. however I live on Tennyson, make a portion of the money you do and my neighbors do not consider me a loser. So not sure why you did not get your hummus.


Posted by Anon., a resident of Crescent Park
on Oct 3, 2012 at 9:45 pm

I don't know how irrelevant nasty pointless comments like "no hummus" are allowed to stay on this board when other posts are so actively deleted when they are so personal or insulting ... why is that EDITOR?

In any case as a Palo Alto resident I'd much rather has Jan as a neighbor than bah-hummus-bug.


Posted by Keri, a resident of South of Midtown
on Oct 3, 2012 at 10:11 pm

Many Palo Alto families, apparentlly, do not face what my family faces. Today, I drove by a gas station that has a digital price board. Last week it was $4.33 per gallon; today it is $4.49 per gallon, 16 cents in one week!

I shop at Costco, and believe me, the prices are rising!

My husband's health care deductions from his paycheck at work are skyrocketing. Our rent has skyrocketed. Our utility bills are climbing very fast. I have yet to see a single product, like car tires, decrease in price in the last several years, they always increase.

Inflation may not be affecting many in Palo Alto, but it is affecting my family.


Posted by Hmmm, a resident of East Palo Alto
on Oct 3, 2012 at 11:47 pm

Keri - you are being affected by rising prices, like many people are, but it's not due to inflation. Gas at Costco is often the best option. Renting on the peninsula is hell in that renters are often considered 3rd class citizens.

What you're experiencing is the decrease in quality of life, based on many factors. We aren't making money commensurate w/the old days of even 20 years ago. I'm sorry to read of your hard times. My work hours were cut just this week so I understand your worries. Since we don't have kids, we're not tied in to having to be in a good school district, which has given us some flexibility. OTOH, it's still EPA! It amazes me that the first place I lived, after college, was w/a friend in Old Palo Alto & cycling was pretty safe then. While I worked 2 jobs to pay off debt, I recall the joy of cycling to the grocery store & being able to buy fresh, local produce in winter.

There was more diversity in your town back then. While it was still expensive, like the rest of the peninsula, overall, the peninsula had more options - low cost & free events, more community events that weren't insanely crowded & I think, a stronger sense of community because news, gossip & catching up was done more in person. Yeah, this is a while ago, when the striving was more muted & people weren't as either worried or smug.


Posted by businessdecision, a resident of another community
on Oct 4, 2012 at 9:29 am

"it's not due to inflation"
"We aren't making money commensurate w/the old days of even 20 years ago."
Translation: in inflation-adjusted terms, we're worse off.


Posted by Hmmm, a resident of East Palo Alto
on Oct 4, 2012 at 9:45 am

Current inflation is lower than it was a year ago, but she's complaining about it now. The problems Keri has encountered - rising food prices, for example, is in large part because she's used to much lower food prices here, compared w/other countries. Our reality is that our groceries are a much smaller percentage of our income compared to other places. When that changes, we really feel it. If she were to move to say, the Chicago area, her cost of living would dramatically drop, espec in housing, so absorbing rising food costs wouldn't likely be such an issue if she had the same combined income as she does here.


Posted by Hmmm, a resident of East Palo Alto
on Oct 4, 2012 at 9:45 am

Current inflation is lower than it was a year ago, but she's complaining about it now. The problems Keri has encountered - rising food prices, for example, is in large part because she's used to much lower food prices here, compared w/other countries. Our reality is that our groceries are a much smaller percentage of our income compared to other places. When that changes, we really feel it. If she were to move to say, the Chicago area, her cost of living would dramatically drop, espec in housing, so absorbing rising food costs wouldn't likely be such an issue if she had the same combined income as she does here.


Posted by Resident, a resident of Another Palo Alto neighborhood
on Oct 4, 2012 at 9:45 am

Not so sure about inflation.

When I was a child, I believe food costs were as high to my parents as housing. Clothing us was expensive too so all our clothes were hand me downs or home made. I rarely had something new from a store and I was the eldest! I was fed homecooked meals because they were the cheapest, snacks were bread and jam (homemade jam made at the end of summer) and treats were occasional. I drank water or milk. I didn't feel deprived because everyone did the same.

No, what has changed is the fact that what was once considered a luxury is now considered a necessity. Homemade is often more expensive than mass produced, and speed and convenience are chosen more than effort as a result.


Posted by Big Picture, a resident of Barron Park
on Oct 4, 2012 at 10:24 am

I don't want to stress you out, but while food and gas prices are going up they are distractions compared with the massive inflation of education and housing. Changes in these areas are far bigger concern for us since they consume 75%+ of our income.

If gas prices go up 20 cents, that's an extra $1-2/week (< $100/year) in my Prius.

Our 2 young kids go to Palo Alto public schools, but we still pay around $20K/year for after school programs and summer camps since my wife and I work full time. If that goes up by 3%/year, that's $600/year more.

U.C. colleges cost around $25K/year in total and are rising far more rapidly than general inflation.

If our home value goes up by $100K, that's another $1,000/year in property taxes.


Posted by Keri, a resident of South of Midtown
on Oct 4, 2012 at 11:57 am

"inflation is a rise in the general level of prices of goods and services in an economy over a period of time" (wikipedia).

Well, that is what my family is facing in this area. The fact that Stockton, CA or Henderson, NV is experienceing housing deflation has no effect in this area, where prices (for most things) are skyrocketing. Everything that I pay for is costing more and more. Gasoline, alone, has almost doubled in the past few years. Rents are out of the roof! I don't pay property taxes, directly, but I certainly do, indirectly, through increased rents.

I took econ 101 (and some more) in college, so I know about supply/demand, monetary supply, etc. I also know that nationwide averages have little to do with specific areas, like the SF Penninsula. However, even our area could do a lot better with lower cost energy, increased development of rental housing supply, better highways and rail to lower cost areas, etc.

At the national level, over the long run, I fail to see how owing China, and other national banks so many IOUs does not lead to hyperinflation. We are currently borrowing to keep the nominal inflation rate low, but that will end.

In the meantime, I clip every coupon I can find, order as many low cost things on the Internet that I can find. My husband changes our oil in our well-used car. He is also a pretty good self-taught mechanic. The only vacations we take are to camping grounds, using our tents.

You cannot tell me that inflation is a non-factor in Palo Alto!


Posted by Larry, a resident of Greendell/Walnut Grove
on Oct 4, 2012 at 12:16 pm

Mac's prediction is slowly coming true. "Keri" is inching in that direction with every post whining about how bad inflation is to him/her....... start to include the buzzwords from the echo chamber...... switch to the "national level".....

Notice that it's now "HYPER" inflation because the rest of the world lends us money at record low interest rates?

Do it Keri, make the leap! you know it's the guy who isn't a 'real' Murican!


Posted by Jan H, a resident of Old Palo Alto
on Oct 4, 2012 at 12:16 pm

Having recently returned from my first real vacation in eight years, which was actually accompanying my husband on a business trip, I would ha e to say that much of western, central, and. Others Europe lives better than we do . BUT, Germany, the Netherlands, Belgium, Austria, and Denmark residents buy European cars (in Germany, almost all German cars are seen). They buy European clothes, not Chinese, Indian,etc.; buy European appliances, tools, and other products.

Gas and food are more expensive, but they have a lot of cheapies and freebies: public transportation, medical care, recreation and activities for kids, etc.

I saw smooth roads, well-kept buildings and streets, and lots of well-protected bike lanes. Very, very few overweight people. Very healthy and active senior citizens. In some places, like Germany and the Netherlands, small child are centers on virtually every corner of every block.

There were far more college graduates and advanced degree holders as a percentage of the population. And far more homeowners as opposed to renters.

Driving home from the airport, the peninsula looked dirty, dingy, and unkempt. Even Palo Alto.

BTW, no hummus for you, if you live on Tennyson, you cannot claim to be a resident of Crescent Park (the. Ost expensive neighborhood in PA).



Posted by Garrett, a resident of another community
on Oct 4, 2012 at 12:39 pm

All I know costs have gone, living in the Bay Area. One word, OUCH. Not everyone here has ending with a college degree, working in tech, or some called of high salary job, shopping at Whole Foods. Have you seen the price for a 50 year old studio apt in Mtn View or Redwood City. Forget driving in from somewhere else, gas and traffic will get you, forget public transit which is a real time killer.


Posted by unhappy camper, a resident of Palo Alto Hills
on Oct 4, 2012 at 12:41 pm

[Post removed by Palo Alto Online staff].


Posted by Joseph E. Davis, a resident of Woodside
on Oct 4, 2012 at 1:03 pm

There is also enormous inflation in government dominated / monopoly services like garbage, sewer, water rates, insurance, and so forth. It's unbelievable what people put up with, and even more unbelievable that so many citizens cry out for more of the same.


Posted by Resident, a resident of Another Palo Alto neighborhood
on Oct 4, 2012 at 1:35 pm

I agree about property taxes and utility charges. Inflation here is alarming and there is no competition so they can do what they like.

It is about time we had a few choices about who takes away our trash, etc. We need a competitive market rather than government monopolies. That is what will bring some of these costs down. When ATT were the only choice our hands were tied, now we have many choices to suit our communication needs. The same about cable tv.


Posted by Keri, a resident of South of Midtown
on Oct 4, 2012 at 1:45 pm

> Today, I drove by a gas station that has a digital price board. Last week it was $4.33 per gallon; today it is $4.49 per gallon, 16 cents in one week!

That was me, 15 hours ago.

Now, the same digital sign lists 87 grade at $4.69 per gallon.

Beam me up, Scotty!


Posted by Garrett, a resident of another community
on Oct 4, 2012 at 1:45 pm

Don't know how or why the subject of hummus or ugly buildings, unless the cost of buying and building has too gone up. Jan H, her family have reason to worry about inflation and also to save money. They purchased a home in Palo Alto, they have kids, own a business. So they own old cars and shop at Target, welcome to reality. grandparents owned businesses during the Great Depression, they worried more about the workers and their community. The businesses they had ended up closing after WW2.


Posted by Larry, a resident of Greendell/Walnut Grove
on Oct 4, 2012 at 2:18 pm

The noise about gas prices is getting annoying. Anecdotal postings are one thing, geee, everything is rising, just terribly!!! Facts, on the other hand...

8 year chart on avg cost per gallon nationally, NOT adjusted for inflation

Web Link


Posted by Garbage, a resident of Another Palo Alto neighborhood
on Oct 4, 2012 at 3:17 pm

Palo Alto garbage, etc. is collected by a private company, chosen by competitive bidding. It is not a government monopoly. The economics of garbage, etc., collection don't lend themselves to having more than one company providing the service.

Last time I checked, insurance was provided by private companies.

Sewers are usually run by governments...after all, they put in the pipes and set up the processing plants. Not a lot of profit for private companies.

Most countries and municipalities and counties in this country that have tried privatized water systems have quickly regretted their choice and fought to get out of their contracts.

Before people unthinkingly complain about things like this, they ought to educate themselves about reality.


Posted by Resident, a resident of Another Palo Alto neighborhood
on Oct 4, 2012 at 3:31 pm

The reality is that we can have choice in garbage collection.

Where one of my family members lives, they have a choice of 3 competing companies who collect trash in the same neighborhoods. Each household chooses the service that serves them best. The only real downside is that they have trash collection on 3 different days so there are always trashcans on the street.

The company my family member uses has a small annual charge which is really a rental for the trash cans. They are charged for each time the can is left out for pick up and also for weight. They are charged per month for the number of lifts (number of cans regardless of whether they are recyclables, compostables or garbage) and also the weight of each lift. There is no charge if they don't put any can out. There is a chip in each can and each can has a lock so nobody else can put garbage in (done through a lock combination system which the garbage truck automatically overrides). They get a monthly bill for usage and the annual charge comes the same month each year as an item on the bill. For a small family this company is the best according to my family member. The other choices might suit a larger family better. My family only puts out cans when they are completely full or if there is a particularly smelly item such as diapers or turkey carcass. This keeps their costs manageable.

There is absolutely no reason why a similar choice should not be available to us.

A monopoly is a monopoly and even if the company is private they are still working for the city and not for us. In my book, that makes them a government monopoly because the city government is not giving us free enterprise in a free market. We cannot choose who picks up our trash and we cannot choose to opt out or reduce our costs by leaving out our trash less often.


Posted by SushiFix, a resident of Barron Park
on Oct 4, 2012 at 3:54 pm


Hummus? Oye vey.

Miyake.

Does anyone know what happened to Miyake?


Posted by Costs, a resident of Stanford
on Oct 4, 2012 at 5:29 pm


@Sushifix: Can not tell you what happened to Miyake - it was probably inflation based business costs that ran them out of town. Happened to Hobees.


Posted by Garbage, a resident of Another Palo Alto neighborhood
on Oct 4, 2012 at 5:43 pm

@Resident: What city are you talking about?


Posted by Resident, a resident of Another Palo Alto neighborhood
on Oct 4, 2012 at 5:48 pm

Dublin Web Link


Posted by Hmmm, a resident of East Palo Alto
on Oct 4, 2012 at 8:53 pm

Jan H. - freebies in Europe? This higher quality of life & "freebies" you refer to are related, except of course, those aren't "freebies". Those services & amenities are paid for by taxes. Minnesota used to be a bit similar - higher taxes, better services, higher quality of life in many ways for its citizens. I haven't kept up w/Minnesota, so don't know what it's like now.

Keri - Henderson, NV & Stockton. Really???? Serious question: Why would you even think to compare those places w/Palo Alto? You can't even compare those places w/the peninsula. Stockton, for example, is a hellacious pit. NV doesn't even have corporate or individual income tax but it has gambling & legalized prostitution, so its economics are quite different.

We're called a peninsula for a reason. We can't build out much more. We can't sprawl the way cities in the central valley & NV did. In many ways, the peninsula is like the North Shore of Chicago, w/better weather. Not far from the peninsula are less expensive communities where people build out because there's more room. This is also a university area & now a high tech area. Those two things mean more intelligentsia, more innovative businesses, more concentrated wealth, thus more expensive real estate thus more expensive housing & more costly services, espec combined w/being on a peninsula. But you know this because you took econ classes, so I'm sorry if I am repeating basics to you. But it's the REAL ESTATE that impacts so much locally (so many long time restaurants closing due to big rent hikes) & other national factors, described earlier in this thread, that contribute to the pinch you felt at the supermarket the other day.

Find a good inflation chart & check it out to see for yourself how inflation is now, compared to a year ago & 30 years ago.

If you've lived in the areas you mentioned in your recent post, no wonder you're shocked at prices here.

Lastly, if you're a renter, you're a 3rd class citizen in Palo Alto, as far as landlords & city decision makers are concerned.


Posted by village fool, a resident of another community
on Oct 4, 2012 at 11:02 pm

just wondering. all?


Posted by Hang in there, Keri, a resident of Another Palo Alto neighborhood
on Oct 5, 2012 at 10:48 am

I think Keri's on to something. Government statistics on inflation understate real world inflation with gimmicks. Try taking out a credit card statement from a few years ago, or a utility bill. Compare it to Hmmm's "inflation chart." I think you'd be surprised at the difference.


Posted by DependOnWhoUAsk, a resident of Charleston Meadows
on Oct 5, 2012 at 11:03 am

Fed head : Zero inflation
Obama : Inflation is under control
Employer : under 2% and you're overpay
Your wife: Every shopping day


Posted by Larry, a resident of Greendell/Walnut Grove
on Oct 5, 2012 at 11:08 am

"Try taking out a credit card statement from a few years ago"

Seriously? wow.... your credit card statement itemizes nothing except YOUR spending habits. Won't tell you that a tee shirt from walmart costs less today than a decade ago, or the price of a loaf of double fiber bread is up 20 cents or the cost for a gallon of gas.

Web Link

wow.


Posted by Paco, a resident of St. Claire Gardens
on Oct 5, 2012 at 12:42 pm

WELCOME TO CALIFORNIA! If you are dissatisfied there are trains that leave California daily. Costs a lot to live here and nothing will change that. Please say kind words about us after your departure.


Posted by musical, a resident of Palo Verde
on Oct 5, 2012 at 2:08 pm

Does anybody's property tax go up more than 2% from year to year?


Posted by Keri, a resident of South of Midtown
on Oct 5, 2012 at 2:19 pm

>Does anybody's property tax go up more than 2% from year to year?

If you add in parcel taxes and utility taxes and (potential) transfer taxes, we renters get hammered by it. It is much higher than 2%. Cancelling Prop 13 will make it much harder on us. The landlords/owners always pass them through, without admission that they are doing it.

The simple fact is that inflation is out of control around here. National inflation figures, so far, do not apply in this area. My family dollar does not have the same purchasing power it had last year.


Posted by Larry, a resident of Greendell/Walnut Grove
on Oct 5, 2012 at 2:41 pm

"Cancelling Prop 13 will make it much harder on us. The landlords/owners always pass them through, without admission that they are doing it."

Disagree. Look at the inverse. Two landlords own identical buildings next to each other. One has owned his for 40 years and pays (near) nothing in property taxes. The other just turned over and the landlord pays a fortune in property taxes

Which has the lower rent when new units come available?

Neither. They price to market and the Prop 13 protected landlord puts it in his pocket. None of the Prop 13 money goes to renters. Never has, never will. Renters get screwed because schools fall apart on their children, roads suck, fees go up.

"The simple fact is that inflation is out of control around here." Again, a specious claim without merit or evidence. Prove it, besides the whining anecdotal stories about parking costing too much or other fact-less drivel.

Keri continues down the road towards her rhyming namesake. Just say it G... ummm, Keri, come out with it. Take the tin foil off and say it.... it's you-know-who's fault, isn't it? He's not a REAL 'Murican like you.


Posted by Keri, a resident of South of Midtown
on Oct 6, 2012 at 12:16 pm

>Which has the lower rent when new units come available?

I don't understand your argument. Forcing an older property to pay the same as recently purchased property will only increase the taxes for the renters (indirectly) in the older property.

Gasoline, 87 grade, is $4.77 today at the same station.

Inflation is alive and well in this area! I know, because I face it everyday. I am in the trenches.


Posted by Hmmm, a resident of East Palo Alto
on Oct 6, 2012 at 1:11 pm

Keri - how long have you lived in Palo Alto, and where did you live before?

It amazes me that people move to one of the most expenses areas in one of the most expenses states in one of the most expensive countries and then complain, as if they had no idea it was an expensive place to live. It's one thing if you grow up w/the high prices and learn both experientially and academically how pricey it is to live here. It's another thing to move here as an adult and then complain in surprise. Maybe that's not the case w/Keri. I'd love to see Stephen Levy or someone spell out for her why it's so expensive here, whether as a renter or homeowner.


Posted by Keri, a resident of South of Midtown
on Oct 6, 2012 at 1:50 pm

>Keri - how long have you lived in Palo Alto, and where did you live before?

I was born in Mt. View. My father was in the Navy, and we moved all over the country. I have lived in Palo Alto for 16 years. I am very aware of the inflation in Palo Alto.


Posted by stephen levy, a resident of University South
on Oct 6, 2012 at 2:50 pm

stephen levy is a registered user.

There are two concepts to distinguish--1) cost of living and 2) inflation. Cost of living talks about the level of prices in an area and can be compared to prices (such as for housing) in other areas.

Inflation is the rate of change in prices.

So an area with high prices/costs could have high, low or average inflation meaning the rate of change in prices.

Palo Alto and the Bay Area are sreas with high costs of living driven primarily by the highest housing and rent costs in the nation.

But this has been true for at least three decades and says nothing about inflation.

The Bay Area also have the highest wages and income for any region near this size and average wages and househol inocme in Palo Alto are even higher.

So the cost of living has to been considered in the context of average incomes.

Generally the reason for high costs in the Bay Area is that this is a place where high wage workers and the businesses they work in want to be. Housing prices and rents in the region stay high becasue people are willing to pay these prices. They reflect demand. It si also true that if we allowed more housing to be built that would have some offsetting effect but Palo Alto will always be a high hosuing cost community for a variety of reasons including great schools.

The measured inflation rate in the Bay Area was 0.7% in 2009, 1.4% in 2010, 2.6% in 2011 and 2.6% in the first half of 2012. This is not much different than the nation.

Yes, gas prices are surging currenly but it is not correct to talk about this as inflation as it is a temporary supply shortage phenomena just as it would not be correct to say we have deflation when gas prices drop by 50 cents or a dollar next month.

Inflation is better thought of as long-term changes in overall prices.

It is also probably true that home and rent costs in PA are rising faster than in other areas as we are in the midst of a high wage job surge.

Putting the exact words aside for a moment, it is certainly painful I would think to have realtively low or stagnant incomes while living in a high demand area with lots of consumers able to pay high prices.

But as a couple of posters said, it should not surprise anyone that Palo Alto and surrounding communities are expensive places to live and work.

There is some evidence that housing costs have pushed average inflation rates slightly above the national average over the past 20 years but only slightly.

The jumps in food prices are being experienced everywhere as a result of the drought but food prices over the long run do not have above average inflaton rates.


Posted by Keri, a resident of South of Midtown
on Oct 6, 2012 at 3:07 pm

>Inflation is better thought of as long-term changes in overall prices.

That is exactly what I am talking about in Palo Alto. Recent price surges only remind me of how bad it is.


Posted by Jan H., a resident of Old Palo Alto
on Oct 8, 2012 at 1:01 pm

Actually, what is happening in this area is called "stagflation". It is a case of inflation happening during recessive economic times. It was once thought to be impossible to occur, but the triple dip recessions of the 1980's proved that wasn't true. We can have inflation and recession at the same time. People are still losing jobs, getting pay cuts, or no raises for years at a time, while prices continue to increase, lowering the standard of living.


Posted by stephen levy, a resident of University South
on Oct 8, 2012 at 3:31 pm

stephen levy is a registered user.

The peninsula from San Francisco to San Jose now regularly ranks among the fastest growing metro areas in terms of jobs. Companies are buying and leasing additional space throughout the region. Morevoer, wage growth here is also above average.

What can be true at the individual level (loss of jobs and income) is not true at the regional, state or national level.

We are slowly recovering from a deep recession but the economy is growing.

Stagflation is not happening in Palo Alto. There will always be individuals who do not share the majority experience.

Moreover, overall inflation is not high by historical standards although it can feel different for different residents. And, just as with the unemployment data, the inlation data are produced the same each month by highly skilled, non partisan professionals.


Posted by Keri, a resident of South of Midtown
on Oct 8, 2012 at 3:58 pm

>overall inflation is not high by historical standards

Really? Rents? Housing prices? Gasoline? Taxes? Utilities? Groceries? Health insurance? Car tires?

What are you talking about, Stephen? Or are you just earning the big bucks, and you prefer not to consider the middle class?


Posted by palo alto mom, a resident of Duveneck/St. Francis
on Oct 8, 2012 at 4:07 pm

Keri - unfortunately Palo Alto is one of the most expensive cities in the country when it comes to housing related things - and rents, housing prices and taxes all go together. Stephen is viewing it from an economists view point, the rest of us consider inflation to be prices rising faster than our incomes. Moving to a less expensive place is one option.


Posted by Jan H., a resident of Old Palo Alto
on Oct 9, 2012 at 1:37 pm

Stephen Levy is a very reputable and well-known economist. The state of California and several local publications consult him often. He knows more than anyone about the California Economy, as it is his area of study and expertise.

We all should listen to him, even if what he has to say is not what we want to hear. That is what makes an economist's job so difficult.


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