We recently took a trip to Kansas to visit my son at Fort Riley. On the way out we were talking about the economy and the Fed’s current position on inflation and monetary easing. I know, real exciting conversation. Inflation became the major topic and I continue to wonder how long inflation will remain low. In the conversation I began to realized a large part of inflation over the last decade has been hidden from view through companies asking us to do service work for them. In other words, we do the work for them for free.
For example, I made my own airline, hotel and rental car reservation before the trip on line. I selected my own car to rent and selected seats on the airplane. These are tasks that used to be done by the airline, hotel, car rental company or a travel agent. When I arrived at the airport I checked myself in, received my ticket and boarding pass from the machine. These are also services the airline used to provide.
Once on-board, I opened my sandwich and real coffee that I purchased at the terminal. I bought my own in-flight meal because the airline has you on a 7:00 am flight for 3 hours and offers, well, the least possible. I’m not sure the coffee on the plane is real; I know the cream is not. Again, this is all at additional cost to me that used to be included in the flight.
When I arrived at my destination my service duties started again, I checked myself in through the kiosk at the rental car company and did the same at the hotel.
When I arrived home from the return trip, I paid for parking via an unmanned terminal in the airport and drove to the gas station where I pumped my own gas and paid via the automated pump. No man wearing a star arrived to whom I could trust my car. At the grocery store I scanned my own food items and paid through the quick check out terminal without interacting with anyone.
Finally, when I arrived home my dog was eager to see me and he expected nothing except a nice pat on the head and for me to throw the ball for a while. At least he did not ask me to fetch the ball for him.
On this trip I realized I was doing much of the service work while receiving no discount or even a thank you, job well done. All of these “conveniences” were supposed to bring efficiency to the equation and lower the cost of service. All I can see so far is that I’m doing the work, paying the same bill, and getting lower levels of service.
This makes me wonder, what is the real rate of inflation? It is probably much higher than reported.