U.S. Social Security Payments Will Increase 3.2% in 2024

11/20/23 @alan279. In Manaus, restaurants are accelerating a trend that took hold at the end of the pandemic:   printing menus without prices.  Customers view the prices on their phones via a QR code.

@abthree Restaurants in Ilhéus seem to be trending away from QR menus now. I find menus on my phone difficult to read. Too much scrolling. Better design could help, perhaps. I’ve read hundreds of books on my phone, and more on my ipad. I haven’t bought a paper book in years. Some friends only read paper books, preferably hardcover.

@abthree CNBC has a series I subscribe to showing how companies are formed and become successful. This story took the idea one step further. In the Grocery Aisles where they have the name, barcode, price of the item and they have to have an employee change the price they now have it done electronically. Instead of putting up a new label etc. they can do it by connecting to the item label and changing the price. The start-up is probably expensive, but it saves on labor costs not to have to change item prices manually in the supermarket.

Roddie in Retirement

Signs of a runaway inflation on the horizon?

    Beach restaurants in Ilhéus have already printed new menus for summer. Prices have increased by ~10%.
   

    -@alan279

Finally a macroeconomics topic - I have seen the inflation number trending towards 8% according to published data.  Is this the rationale for the 10% number?  Also there were instances in the past when the inflation numbers were in double digits, did you see according increases?

And did those increases discourage the locals from going to restaurants?  I am sure that expats and tourists are less affected by those increases.

Who are suffering more from the increase in prices?

@Pablo888 My study of restaurant pricing is very limited. My guesstimate of 10% price increases is based on the menu at a nearby restaurant that I frequent. And that's a rough average. There were two dishes that increased by 20%. And the menu is different this year. New management. Apples vs oranges.

My guess is that the new manager raised prices by 20% to match prices in his other restaurant. And he may be adjusting prices by consultation with the previous manager, or maybe he has an AI setting prices? I know nothing about restaurant management.

I’ve cut back on meals in restaurants. None of my friends have mentioned the increased restaurant prices. And the poorest people here don't eat in restaurants.

Sorry I’m not much help with economics.

@roddiesho Electronic price labels probably aren’t expensive.

@sprealestatebroker ”Signs of a runaway inflation on the horizon?” I hope not. But I still don’t understand Brazil’s high inflation/high interest rates/protectionist import taxes. 15% per month on a credit card? 😵‍💫

@sprealestatebroker, it looks like the country 2023 real GDP growth is going to be in the 1to 1.6%.  When adjusted for inflation, it will feel like a -2 to 3% GDP growth.  Looking at information available at tradingeconomics.com, there is a slowing but still negative trading deficit (which means that import taxes will not decrease), the producer price index is recovering but still negative...  In summary, the economy appears to want to avert a slowdown.  The current drawback of inflation seems to be the associated high lending rates which will impact real estate affordability - which is consistent with a lower residential property prices.

Wondering if the Banco Central Do Brazil will implement a policy to stimulate demand.

    @sprealestatebroker ”Signs of a runaway inflation on the horizon?” I hope not. But I still don’t understand Brazil’s high inflation/high interest rates/protectionist import taxes. 15% per month on a credit card? 😵‍💫
   

    -@alan279

Bank Cartel my dear chap.  And the Retail Banking Consolidation has not helped much. 

In the past, you could blame government for running out of control debt.  That is no longer the case. They are  just not allowed to  print money as they used to do.   Banco Central has ceased to be a piggy bank for the Brazilian Federal Government.,  It is just a tight money supply phenomena.   

And the trend, as far as the US goes, is to increase the cost of money, and pervasive inflation rates, Stateside.

I would suggest to all to watch or read anything on "Plano Real under the Fernando Henrique Cardoso's Administration."  All it took to tame the inflation ( at that time, close to 1000% per anum ) is there.   Foget Lula ( he rode on the coatails ), forget Bolsonaro.

As far as inflation goes, there is a Brazil before Fernando Henrique, and one after Fernando Henrique. No, he ain't Jesus, but his team did a pretty darn good job at taming runaway inflation. 

https://en.wikipedia.org/wiki/Fernando_Henrique_Cardoso

@sprealestatebroker, the plano real consisted of policies aimed at slowing down the economy (to decrease demand) and stop currency dilution.

Are you seeing the same monetary policy being applied to reduce inflation?

    @sprealestatebroker, the plano real consisted of policies aimed at slowing down the economy (to decrease demand) and stop currency dilution.
Are you seeing the same monetary policy being applied to reduce inflation?
   

    -@Pablo888

There is more to it.

They put State owned companies on the block.  The biggest emiter of debt was the Federal Government, proping up poorly managed corporations they owned. 

They cut government spending at first and worked under a budget, something it never existed then.. The Banco Central was issuing currency to pay the government tab. As if was the Treasury.  They stopped that.

They  went on a pact pledging large business on the supply side to stop increasing prices for a while. 

They replaced the existing devalued currency by a floating indexed currency. 

A chronological and rather promotional series has been done on this....

Search on Youtube

ECONOMIA BRASILEIRA' : 1994 – 2002 – O Plano Real (with English subtitles)

The Brazilian economy is depressed as is it.  No need to put the squeeze.  It rather needs to grow. 

The similarity of "monetary corrections" you see Stateside is the same we've seen before, way back to the 80's and 90's in Brazil.

When the biggest borrower is the Government, it makes money supply more expensive and dilutes the money's buying power so it can continue to extract money to pay for its debt to which  otherwise could not obtain through taxation.

It does not take an economist to know this.

The whole shapping of demand to stem inflation is nothing short of malarkey. 

It rather needs to grow. 
    -@sprealestatebroker

Any published documentation on areas where investments are encouraged in Brazil?

Thank you.

Found the following paper from DeLoitte -> https://www2.deloitte.com/us/en/insight … look.html.

Manufacturing is decreasing and imports increasing... It look that both Keynesian and Say's Economic theories are at work.  With the Brazil - China relationship improvement, manufacturing will move to China and imports will increase - just like in the US.

Innovation in manufacturing / agriculture would be one of the preferred ways to counter that trend as China has already the economies of scale for manufacturing and the financial capabilities of providing Chinese subsidies indefinitely.

Another reason for protection tariffs - steel.

https://www.spglobal.com/commodityinsig … put-slides

China has been practicing steel dumping export - from construction rebars to nuts and bolts / tools.  When you buy an ikea product, you also get a few steel tools such as an allen key or extra nuts or bolts.  Those are not high quality carbon steel and are meant to be used once or twice.  This cheap steel is often made out of processing from coal fired furnaces as there is no need for high precision carbon content monitoring.

The reason for protectionism here is to encourage the steel industry to stay and continue to invest in Brazil.  Ideally, the steel industry should invest in the more efficient and cleaner electric arc furnace - but this requires lots of electricity.  Lots of infrastructure build up needed but it would make more sense to process the steel, copper, and other products closer to where the minerals are extracted rather than export raw materials and receive the finished product.

Someone asked why the import taxes - and that's one of the reasons.

     It rather needs to grow.      -@sprealestatebroker

Any published documentation on areas where investments are encouraged in Brazil?
Thank you.
   

    -@Pablo888

This is an entity that congregates manufacturing concerns in Sao Paulo

https://www.fiesp.com.br/

Given the lack of affordable financing for some areas, notably, manufacturing, here is a Government Bank that lends at lower interest rates

https://www.bndes.gov.br/wps/portal/site/home

Most of any areas you find worth investing, there are no publications that can lead you to a pathway to safer investments. One rather observes

a product or service, or lack of thereof, and wonder if investing in such would provide with payback. Which leads you to been a keen observer of how Brazilians

make do with a product, or with an inferior inadequate product to meet their needs. 

I will give you an example, close to my knowledge... Hand tools, mechanic tools to be more specific.

If you in Europe and America, you have the choice of buying an inferior quality China made or opt for the locally made brands available through mobile jobbers. Snap-on, Cornwell, Matco, MAC, SK, Facon, Channel Lock, and so many others.

The problem with importing any item in any of these brands is that, first, they are expensive as it is in their Countries of Origins.  I still remember, a set of combination wrenches from Snap-On, going at USD 250,00 retail .Quality built, lifetime warranty, excellent on the hands of a professional mechanic.

Now, imagine importing these, at that retail price, plus customs. No one will be able to afford them here in Brazil.

Compounding to the matter, in Brazil, the practice of mechanics buying their own tool set under employ of an auto dealership or independent repair shop is non existent. In America, you are paid by the job, not by the hour. On average, a dedicated mechanic will invest, in tools alone, about USD 40,000 during his productive years, just about before he gets into a home mortgage. Plus an easy USD 10,000 to USD 20,000 for his tool storage.

All of that does evidence how low is the productive at a job like a mechanic. In a typical Brazilian auto shop, the owner buys a basic set of tools and distribute for his mechanics to work on cars.  Specialized tools then are supplied from the tool shed.

The US model of a mechanic supplying his own tools goes back to the days of the Great Depression. 

The only way to put the right tools in the hands of mechanics is that ...

1.They get paid more in line to what they are worth

2.You can't import them , they need to be made here, notwithstanding the lack of know how and capital

3.The Chinese won't supply you with anything worth buying, given their abysmal low quality on most manufactured goods. 

This is one in many circumstances you have to consider investing in the manufacturing sector.

Even if you consider buying Chinese Made hand tools, then there is the issue of low value added and quality. 

A screw driver/philips driver set is where I find the most glaring aspects of how manufacturing here concentrates in the low end of the quality/engineering range.

Your Made in the USA tool features a product that requires more elaborate tooling. For instance, the hex base on a screw driver set sold here is non existent. In America, every manufacturer features its screwdriver with a hex base. And ergometric handles. And hardened vapor blast tips for better griping. 

That feature above requires specialized tool and dies. No made in Brazil. The local ones, Corneta or Tramontina, they don't have.

And you can go on and on with any manufactured product line. Sports gear, housewares, apparel, ...

It boils to know the addressable market for what one maks , to such  there is no reliable source of information to draw upon, if you wanted to see if it is worthwhile to invest upon it. Eventually, someone wades through the darkness, makes a bet, and gets away in creating a market where naysayers would claim non existent. 

It used to be like that with just about every category of manufactured goods. Back in the 40's American Industrialists would claim the impossibility of making cars in Brazil. They would blame the climate as to hot to install engine foundries ( total nonsense ). It took a once in a lifetime President (Juscelino Kubitschek ) to debunk this myth and invite car makers to set up assembly plants in Brazil.

And back in the 80's there was belief that the market, then putting out about 1 million units a year, would not support more than four car makers. Which again, is malarkey, meant to benefit Ford Motors, General Motors, VW, and later Fiat. The maligned Fernando Collor proved it wrong opening up at first to imports.

Now, it is a 3 million units per year market, with many makers having their own assembly plants either in Brazil or Argentina.

@sprealestatebroker, good examples of problems but my glass half full gut feeling is that there are Brazilians who can rise to the challenge of coming up with better solutions at a lower price point than the rest of the world.

For example, since I have first hand experience on the Boeing 707, 747, and 767 aircrafts, the Embraer airplanes are very respectable in the small and median size category.  There must be an industry that benefits from an absolute competitive advantage in Brazil.

    @sprealestatebroker, good examples of problems but my glass half full gut feeling is that there are Brazilians who can rise to the challenge of coming up with better solutions at a lower price point than the rest of the world.
For example, since I have first hand experience on the Boeing 707, 747, and 767 aircrafts, the Embraer airplanes are very respectable in the small and median size category.  There must be an industry that benefits from an absolute competitive advantage in Brazil.
   

    -@Pablo888

Well, Embraer had the luxury of being the chosen one from the Military Junta, way back in the 60's.  Aviation was a strategic decision and they afforded Embrar of building duty free, with government sponsored loans.

Still, during the 70's the Armed Forces had to import their combat airjets, as the Brazilians did not master the know how in producing them. The beneficiary was then Marcel Dassault from France.  The closest they had back then was a turbo prop , the Xavantes, used as a training airplane and for some recognance. 

There were no midsize to small jets back then . It was, again, a Turboprop, the Bandeirantes.   

They had the Federal Government Tutelage, back then. Other small domestic aircraft assemblers floundered. 

Had them not being backed by the Brazilian Government, they would not survive until now.  And we had the competition from abroad.... Learjet, Bombardier, Fokker.

@sprealestatebroker, military airplanes are something different - and I think that Brazil should not invest in this vertical as this is R&D intensive.  WRT commercial airplanes, I think that Brazil should continue to develop and innovate in that field as Brazil is a large country and could support more small aircraft sales.

Getting a single engine airplane is not expensive - it's the maintenance and storage that makes it expensive.  That's an industry that the government has already provided support and it would be easier to bring back rather than backing a new industry such as steel.....

Still trying to find what area Brazil can grow more...

@sprealestatebroker, I found this rather "optimistic" and vague paper about the declining Brazil productivity and possible reversal of that trend -> https://www.wipo.int/edocs/pubdocs/en/w … ition.pdf.

Although this analysis is kinda shallow, it highlights the challenges in governance, skills, and management to increase productivity.

I wonder what it will take to get skilled resident expats to start something that will increase general productivity in Brazil.....

PS:  about 2 decades ago, I helped a relative in Southern China get started on a small industrial automation product and now he has expanded from local industries to consumer products for export and striving at this....