Quote:
Originally Posted by nis350
I hear you... We're in the new normal relatively speaking. Inflation is totally insane during the last few years or since COVID first started. Fed's recent action is historic and yet, the inflation is still heading upward. The Fed's 2% target rate is totally misleading because it is based on 12 month rolling average, especially with the rate trending up for the last few years.
IMO, it need to go negative for a long duration to restore some of the price increases, and yes, it is going to happen.
My neighbor just picked up an Corolla GR for $15k over msrp, and he was jumping for joy. He said he got offer to sell it for $25K over. It is transaction like this that will keep car prices extremely high for a very long time.
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There's nothing "normal" with the current market. This is actually a first to where the Feds cannot refer to a previous play or scenario to guide them through the current economic situation. Jerome Powell even admitted to not understanding inflation: "We now understand better how little we understand about inflation" - June 2022.
Barry Habib (one of the world's most respected economists) so eloquently describes inflation as "too many dollars chasing too few goods". When COVID happened, Feds drastically cut rates to prevent the economy from crashing, but the other half of the equation is supply. Due to COVID, the global supply chain was disrupted, so there was alot of money pumped into the economy, but not enough goods to support the demand. This is when inflation really became out of control and the Feds were too late on raising rates to keep inflation in check. Inflation will continue to rise as long as supply is scarce. Raising rates may help, but the biggest key is getting the supply chain back in order.
Buying/selling cars at higher inflated prices will NOT keep car prices high. It is the lack of supply/inventory that will keep prices elevated. If more supply become available, this should stabilize car prices.