Detroit News Media Report on Toy Prices

"Good Grief, Charlie Brown!" 

Last year at this time we were hoarding toilet paper and disinfecting wipes.  Now I've got to start hording Lionel Trains and Testor's paint!  One thing I know for sure is that if prices go up 10% due to raw materials and shipping cost regardless of what happens to those costs in the future that 10% bump isn't going away!   

John

I don't see how people are gonna afford this.  I've noticed a lot of bare shelves in Wal Mart and a lot of it is things people have to have.

I was at the Disney department at JC Penney’s yesterday with the granddaughter and I certainly noticed that there were many empty shelves.  This is at a mall north of Seattle.
Alan

Empty shelves at many retailers I have visited. I have never seen this phenomenon before, but the Covid Pandemic has upset so many aspects of our lives and it is going to take a while to sort out. I suspect that a “new normal” will prevail and we will have no choice but to adjust to it.

Interesting that they don't have enough toys to sell or enough workers to explain to people that they don't have enough toys to sell.

BTW, although the percentage increase cost in shipping is interesting, I really don't know how to relate the shipping cost to the price of an item as a percentage. I'm sure it varies a lot, but I assume its a very low percentage. And how much of the increase is due to the price of oil? Last year was a historically low price year for oil.

Gerry

• Something tells me this was going to happen.  Covid accelerated the process.  People in charge today do not have any idea how goods and products are produced or transported.

@Dominic Mazoch posted:

• Something tells me this was going to happen.  Covid accelerated the process.  People in charge today do not have any idea how goods and products are produced or transported.

Dominic,

" People in charge today do not have any idea how goods and products are produced or transported."

I have never seen a more broadly cast statement with absolutely no backup to the claim.  Never.  Ever.

Are you saying that the entire manufacturing, distribution, and sales chain for everything is irreparably broken?  If so, we're all going to die within two or three weeks because we won't have any food to eat, much less anything else we need to live.

I don't think so.  There's no question that COVID-19 caused a major disruption of the kind that very few people have had experience with in the past.  But I've been very impressed that so many people have taken lemons and made lemonade, and good lemonade at that, in spite of it.

This will clear.

Is the world suddenly chock full of poorly trained know-nothings?  No.  There are only a few thank goodness, just as there always have been.

Mike

Everything revolves around OIL. Not only for shipping but for manufacturing. Plastics are made from oil. The factory's are heated by oil or gas. Oil or gas is used in the manufacturing of products. When the price of oil comes down maybe the prices will come down. Don't hold your breath.

Jim D.

It will be interesting to compare prices from the upcoming Lionel 2021 V2 catalog to previous catalogs.

I'm hoping they do a few runs of products that they have made in the past so we can compare "apples-to-apples".

@Mellow Hudson Mike posted:

There's no question that COVID-19 caused a major disruption of the kind that very few people have had experience with in the past.  But I've been very impressed that so many people have taken lemons and made lemonade, and good lemonade at that, in spite of it.

This will clear.

Is the world suddenly chock full of poorly trained know-nothings?  No.  There are only a few thank goodness, just as there always have been.

Mike

Agreed, this is a delayed result of supply shutdowns a year ago. My job involves bulk materials in landscape supply.

After going "gangbusters" during the height of Covid last year, we are now down to 3.5-4 days a week. A shortage of raw materials due to shutdowns in all areas a year ago.

I know folks in the garbage/recycling industry that have had days with no garbage. How can THAT be?

Its like a wave, it takes time to finally reach the stores and be evident. Hopefully once it passes, things will return to normal.

Laws of supply and demand are still in effect. At some point due to lack of demand prices will come down or manufacturers will have to shut down for lack of sales.

Pete

I think the last thing that we want to see is manufactures shut down and go out of business.

You can't print and hand out trillions of dollars in a year and not expect the value of your money to decrease (that means prices go up).  Lots more dollars are now chasing a fixed number of products.

It's that thing we don't teach in school anymore called economics.

I've been placing a lot of pre orders for  mostly rolling stock/a couple of engines and was surprised that the prices seemed rather reasonable, unlike the sharp increases with transformers and control systems.  I think the biggest spikes are for products that need scarcely available chips.  As for inflation, yes, ignore the short interest rates. They are being manipulated downward by the Fed (allowing rates to rise would result in our entire budget going to pay interest on the outstanding debt). However, due to the supply chain interruptions, inflation is definitely upon us.   The question is how quickly can they be fully restored or will we see this continue through next year and beyond?

@aussteve posted:

You can't print and hand out trillions of dollars in a year and not expect the value of your money to decrease (that means prices go up).  Lots more dollars are now chasing a fixed number of products.

It's that thing we don't teach in school anymore called economics.

@Mellow Hudson Mike posted:

Is the world suddenly chock full of poorly trained know-nothings?  No.  There are only a few thank goodness, just as there always have been.

Mike

Here we go with the no-nothings again.  Economics is still taught in most schools, at least around where I live, and the current generation is not any more out of touch than any previous one.

I'm not sure that any of us, including the professional economists, fully understand the significance of the size and duration of the disruption to the economy caused by the pandemic, and our response to it.  Trying to be prepared in advance for such an unlikely occurrence, and thousands of other ones like it, can only get you so far.

Patience.

Mike

Sorry didnt mean to upset anyone.  And no reference to pandemic, just basic M1 money supply economics (regardless of pandemic).

And now back to toy trains.  Menard has released a powered unit.

@aussteve posted:

You can't print and hand out trillions of dollars in a year and not expect the value of your money to decrease (that means prices go up).  Lots more dollars are now chasing a fixed number of products.

It's that thing we don't teach in school anymore called economics.

That isn't the cause of the inflation we are seeing, and I am getting a little tired of it, we have been running deficits for the years before covid and we didn't see any large inflation, how come.........in the 3 years prior to covid we were running 1 trillion a year deficits with a supposedly booming economy....

The inflation you are seeing is real, and it is caused by Covid related circumstances. With Covid raging, they had cargo ships sitting outside the ports on the west coast (hint: where most of the stuff made in Asia comes into the US), so stuff couldn't get in....or out. Why out? stuff wasn't moving from the US to China, which is how containers get back there, so there are shortages shipping out of China. One of the problems was shipping companies, anticipating a recession, cut back on their orders for containers (said companies then laid off their employees)...so when it turned out that during Covid there wasn't a mass recession, where there was demand, they couldn't bring in enough to meet demand. Lumber skyrocketed, not because of shipping, but because lumber companies cut back production anticipating slack demand, and are now scrambling to catch up (lumber prices are starting to drop).

Basically the whole supply chain is wacked out with all this. Oils and cleaning products and paints have problems because of components they need not being available and chips are like scarce as ice cubes in the desert sun. I needed the dz-1008 relays and they are like backordered and no one knows when they will be available (fortunately I can wait, given my track laying is likely gonna take longer than the transcontinental railroad).

Oil prices aren't directly involved. The price of oil today is roughly where it was before covid hit, there is a battle going on between producers in OPEC that is causing a hit (it isn't because the US doesn't have enough oil, we do, it is that oil is traded globally and prices are set globally). 

Add that to a world where most stuff is made via just in time inventory, where manufacturers depend on parts being there right when they are needed, and you have a mess. The auto industry is producing cars at like half the volume because they can't get the components needed for the ECU's and other control systems. Sony and Microsoft are going crazy because they can't meet demand for PS5 and Xbox (whatever the heck it is up to) consoles. One of my employee has been trying to get a replacement laptop battery for 2 months (they can't just go and buy from some Chinese place on ebay or amazon, has to be an official laptop battery from the maker).  Eventually it will straighten out but it does show a lot of weak points in the current system, among other things, not surprisingly, that most people in industry and the like assumed a pandemic would never happen and their global supply chain would just keep chugging along. It is funny, industries spend a lot of time on contingency and disaster planning, take it from me, but they spent zero time on the thought the supply chain would break. Add to that another one, if the weather hypothetically goes to heck, what happens to shipping them if ships are facing increased storm activity, especially in the pacific? What happens when major storms routinely knock out truck and train shipping?

@bigkid posted:

That isn't the cause of the inflation we are seeing, and I am getting a little tired of it, we have been running deficits for the years before covid and we didn't see any large inflation, how come.........in the 3 years prior to covid we were running 1 trillion a year deficits with a supposedly booming economy....

The inflation you are seeing is real, and it is caused by Covid related circumstances.

Well said.

Back to the trains.  I think I'll be heading to Menards this afternoon.  I hear they have a new power unit and it appears to be just what I'm looking for.

Mike

Basic economics:     You increase the money supply without increasing the available products, you get inflation.   think about it!    If you have $100  chasing 10 lionel cars they are $10 apiece -- if you just add money and now have $200  still chasing the same 10 lionel cars,    They will sell for $20 apiece.   

If you have reduced supply and more money, it just makes it worse.

The Fed has been messing with the prime rate and other things to cause reduce the effects, but it is catching  up to  us.  

I used to buy gasoline in 1964 for 20 cents a gallon using  2 1964 dimes.

Today, I can still buy a gallon of gas with any two dimes made before 1965.

It may have something to do with the value of your present day money.

@prrjim posted:

Basic economics:     You increase the money supply without increasing the available products, you get inflation.   think about it!    If you have $100  chasing 10 lionel cars they are $10 apiece -- if you just add money and now have $200  still chasing the same 10 lionel cars,    They will sell for $20 apiece.  

If you have reduced supply and more money, it just makes it worse.

The Fed has been messing with the prime rate and other things to cause reduce the effects, but it is catching  up to  us. 

Supply and demand is playing a role here,that is classic economics at work.  The thing is the government has been doing that by running deficit spending all along and it didn't create widespread inflation. The government basically did the same thing with a 2.1 trillion dollar tax cut, yet inflation didn't happen.

Now let's look at the pandemic. The idea that government spending is generating this alone is not true, pure and simple. Yes, the government stimulous checks definitely helped fuel demand, there is no doubt about that, but there were a lot of things fueling demand that is being left out. People were not travelling on vacations and the like, were not spending money on travelling to the office, all those things, so they had pent up money. Did they save it? No, they used it to do things like fix up their houses (try getting a contractor these days..). Or they spent it on RV's (the whole industry has been in a huge boom, I mean unprecedented). The irony of Covid is some people lost their jobs in industries hard hit (restaurants and hospitality especially), others suddenly had a lot more money.

The problem? The supply is restricted, thanks to the global supply chain and the (bad) bets that shippers and manufacturers made. Put it this way, some of the hardest hit states with covids actually had budget surpluses, that tells a big picture about what happened during this. You have restricted supply and prices are going to go up, even without stimulus.

The problem with classical theory about deficits it says that by printing more money, the value of each one goes down, and that was true. The problem is that these days currency value is determined on how the currency trades in international markets, and the dollar is still strong compared to other currencies, that is where classical inflation would come from. If the value of the dollar drops, then when you buy products from a country where there are 3 of their unit to a dollar, and suddenly a dollar only gets 2 of them, you will pay more dollars because it still costs 3 of their currency unit.

Again, the government stimulus increases demand and that in turn can cause prices to go up, but with covid the demand is from a lot of money not spent on other things and a severely reduced supply thanks to covid. Until we get to the point where the supply chain is working fully, where the auto industry isn't producing half the cars they normally would and so forth, we would see inflation even if the government wasn't 'printing money'  or deficit spending. Without the stimulus checks the inflation might be a bit less, but they pale in comparison to what consumer spending is in total.

@bigkid posted:

Supply and demand is playing a role here,that is classic economics at work.  The thing is the government has been doing that by running deficit spending all along and it didn't create widespread inflation. The government basically did the same thing with a 2.1 trillion dollar tax cut, yet inflation didn't happen.

Now let's look at the pandemic. The idea that government spending is generating this alone is not true, pure and simple. Yes, the government stimulous checks definitely helped fuel demand, there is no doubt about that, but there were a lot of things fueling demand that is being left out. People were not travelling on vacations and the like, were not spending money on travelling to the office, all those things, so they had pent up money. Did they save it? No, they used it to do things like fix up their houses (try getting a contractor these days..). Or they spent it on RV's (the whole industry has been in a huge boom, I mean unprecedented). The irony of Covid is some people lost their jobs in industries hard hit (restaurants and hospitality especially), others suddenly had a lot more money.

The problem? The supply is restricted, thanks to the global supply chain and the (bad) bets that shippers and manufacturers made. Put it this way, some of the hardest hit states with covids actually had budget surpluses, that tells a big picture about what happened during this. You have restricted supply and prices are going to go up, even without stimulus.

The problem with classical theory about deficits it says that by printing more money, the value of each one goes down, and that was true. The problem is that these days currency value is determined on how the currency trades in international markets, and the dollar is still strong compared to other currencies, that is where classical inflation would come from. If the value of the dollar drops, then when you buy products from a country where there are 3 of their unit to a dollar, and suddenly a dollar only gets 2 of them, you will pay more dollars because it still costs 3 of their currency unit.

Again, the government stimulus increases demand and that in turn can cause prices to go up, but with covid the demand is from a lot of money not spent on other things and a severely reduced supply thanks to covid. Until we get to the point where the supply chain is working fully, where the auto industry isn't producing half the cars they normally would and so forth, we would see inflation even if the government wasn't 'printing money'  or deficit spending. Without the stimulus checks the inflation might be a bit less, but they pale in comparison to what consumer spending is in total.

^^ Nailed it.  Enjoyed reading your summary - glad I caught it before the thread goes bye-bye.

Most of us are old enough to have lived through inflation in the 1970s, the stock market crash of the late 80s, the recession of 2008, etc.  In every case, those who panic are screwed and those with patience are rewarded.  It will be the same this time.

@Mellow Hudson Mike posted:

Well said.

Back to the trains.  I think I'll be heading to Menards this afternoon.  I hear they have a new power unit and it appears to be just what I'm looking for.

Mike

Ummm.  They're already sold out.  Sold out in a couple of hours.  Menards only made 200 units.

Rusty

@aussteve posted:

I used to buy gasoline in 1964 for 20 cents a gallon using  2 1964 dimes.

Today, I can still buy a gallon of gas with any two dimes made before 1965.

It may have something to do with the value of your present day money.

No, it has to do with the collectible value of those dimes. Part of it is pre 1964 dimes have large silver content, part of it is collectability because people think the silver in them is going to get them rich. I looked up it, 1964 and earlier dimes go for 1.25 to 2.00 as collectibles. You cannot use collector value as a means of determining the value of currency.

Obviously there has been significant inflation since 1964, but trying to use the value of a collectible to show it is basically false. Like saying because a super mario cartridge from a nintendo player in 1984 that was never opened went for 1.5 million that it proves there was such huge inflation.

1964 dimes are certainly not collectible.  They made 2.2 billion dimes in 1964.  You can buy them in $1000 bags most anytime you want.  You just have to pay for their silver value.  Most Roosevelt and Mercury dimes are not collectible, but they are valuable because they're made of 90% silver alloy.  So their cost/value is related directly to the market price of silver.  The silver is what gives them their value back in 1964 and today.  The price you pay changes daily based on the silver bullion price.

It is what they call hard currency.

It's what USA money was based on prior to 1965.  A paper one dollar bill was redeemable for 1 ounce of silver.

Your money today is called fiat currency.

@ftauss posted:

This is what happens when you are dependent on Communists. Now they are outsourcing their shortages. Cut off all trade with them, repudiate the debt.

Communists? Where? They (country "C") have stock markets, stock companies, unfair distribution of wealth and corporate overlords. Sounds like capitalism to me.

The last "Communists" are in Cuba...for the moment.

Doesn't matter. I gave up on the whole thing when they cancelled Dullcote a while back. Last straw, and all that. I mean, 330 million of us and we can't even support hobby paints?

BTW - I just tried "dull coating" some decals with a hardware store clear matte...it ate up the decals. Thankfully it was an experiment.

@aussteve posted:

1964 dimes are certainly not collectible.  They made 2.2 billion dimes in 1964.  You can buy them in $1000 bags most anytime you want.  You just have to pay for their silver value.  Most Roosevelt and Mercury dimes are not collectible, but they are valuable because they're made of 90% silver alloy.  So their cost/value is related directly to the market price of silver.  The silver is what gives them their value back in 1964 and today.  The price you pay changes daily based on the silver bullion price.

It is what they call hard currency.

It's what USA money was based on prior to 1965.  A paper one dollar bill was redeemable for 1 ounce of silver.

Your money today is called fiat currency.

We have been on fiat currency a long time, the silver certificates you talk about went out of existence a long time ago. The Bretton Woods agreement pretty much killed the idea of currency backed by gold or silver, most of the world went of partially or fully the gold standard in the 1930s.  Yes, the current pre 1965 had a lot more silver in it (or any), and thus always has the intrinsic value of silver in it, you are correct in that.

One interesting fact, the inflation rate from 1964 until today is about 9 times....yet the dime is going for more than 90c. That tells you that the price of silver or the value of a 1964 dime based on supply and demand has outstripped inflation.

An NPR piece on lumber prices--shot up and down but not so much and a discussion of some of the reasons.

lumber pricing

Interesting post, haha I skipped class during economics in High school so you guys just catched me up..Thanks!!

I have a bucket full of dimes..I got my weekend planned out to find me some pre-1964 dimes...$$$$$$

Typical off topic posts that spoil the entire purpose of the thread.  Closed!