LilBob

An Unpleasant Comparison: Demographics and Deflation

I was thinking of the topic of economic deflation earlier today and realized something pretty striking. I made a little chart of what I expect I'll spend in my lifetime compared to my parents. Given that I'm an individual comparing myself to my father and step-mother, a ratio of 50% represents spending parity.

All figures represent "real-dollar," spending, not adjusted for inflation:

Amount of health care services I expect I'll consume in my lifetime:
<25% (projected life expectancy of between 68 and 72 years)

Amount of travel I expect do do:
<10%

Amount I expect to spend on housing/square footage of my domicile.
<25%

Amount I expect to spend on motor vehicles
<20%

Amount I expect I'll spend on dining/entertainment
<15%

Amount I expect to spend on a boat
0%

Amount I expect I'll spend on clothes/televisions/ap...
<15%

I know this is idiosyncratic at best but those figures are-if anything-on the high side.

Is Inflation a Fact… Or Just an Opinion? Part II

The relative strength of the dollar currently is largely correlated to declines in automobile use and oil consumption. Inflation is going to be causally linked to oil consumption once the economy picks up again, and energy costs will become a political factor affecting the Fed's ability to absorb available capital. Oil futures are likely to be relatively soft for the next few months. Once the job market does start improving, if Americans go back to buying gas-guzzling SUV's, then high energy costs will weaken the dollar and we will see massive inflation. If Americans have been burned enough by this recession that Ge-X-ers start hoarding cash like the WWII generation did, then inflation will be relatively more mild.