“Bloomberg – The cost of maintaining a drugs, booze and cigarettes habit got a lot more expensive in the U.S. last year, rising the most of almost anywhere in the world, the annual Bloomberg Global Vice Index shows.”
Economists, portfolio managers, politicians, laypeople. We’ve all been wondering for years, how it could be possible that, in the era of cheap money, there haven’t been any inflationary consequences. Sure, one can argue that inflationary pressures have made their presence known in equity markets, as the financial system has benefited the most from a decade of low rates. But I’m talking about real inflation, the kind of insidious inflation that eviscerates the consumer’s purchasing power and drives raw material prices through the roof. Well, ladies and gents, it’s finally arrived – we’ve just been looking for it in the wrong places, at the wrong raw materials, if you will:
“The gauge compares the share of income needed to maintain a broad weekly habit of cigarettes, alcohol, marijuana, amphetamines, cocaine and opioids…”
There you have it, the purchasing power of your typical 18-30 year old, white-collar professional is deteriorating right before our eyes. According to this Bloomberg index, the weekly cost of living your best life as George Jung is about $617/week (an YoY increase of over 50%). While that sounds expensive, it’s even worse considering this amounts to 54% of average weekly income. If you’re, quite literally, blowing 54% of your take-home pay while living in NYC, you’re most likely surviving on 2 Bros. Pizza and 16oz. PBR’s at Brother Jimmy’s as well – and that’s no way to go through life (just your early 20’s).
I can’t say I’m surprised, though. If you think about how well the economy performed in 2017, a massive YoY increase like that makes perfect sense. Americans are, generally, more well off than they were at this point last year, and in true American fashion, we’re burning through our newfound wealth, celebrating like the consumers we were born to be. The jury’s out on whether being this specific type of consumer en masse is bullish or bearish for America’s future prospects, but we’ll deal with that issue when we get there – and if living to excess and dealing with the repercussions later isn’t the definition of Americanism, then I don’t know what is.