Technology Beats Inflation (+ Digital Deflation)🤖🦾
Elon Musk tweets that 'Inflation might be Trending Down' and this is a good pass to discuss how technology can fight inflation.
What economists know but the media generally ignores is that the public might not realize that digital goods and services typically reduce both actual and measured inflation.
Even as the economy hits severe headwinds and prices for gas, food and other essentials keep climbing, with inflation at a 40-year high, America is in the throes of the biggest business startup boom of a generation, according to the U.S. census. An incredible 5.4 million people applied for small business licenses last year—a jump of more than 50% from 2019 in an economy that is otherwise actually shrinking. In fact, despite a backdrop of so much gloom and doom, global investment in startups shattered records in 2021, hitting $643 billion—10 times what it was 10 years ago.
While the Bureau of Labor Statistics released the May 2022 Consumer Price Index showing overall inflation shot up even more than the month before, at 8.6 percent, Bloomberg reported on the Adobe Digital Price Index which showed inflation online actually was at 2%, with an .7% drop month-over-month, for the third month in a row of price drops online, with the majority of product categories online showing price decreases.
That’s not to trivialize the rising costs of essentials, like milk and housing for those who are struggling at the margins of economic viability, but online services and products do typically cost less than their offline counterparts. That is a bright spot for beleaguered consumers. Digital media platforms make comparisons for competitive prices easy. And digital tools spur productivity, supply chain efficiencies and cost savings on the supply side that mean lower prices for consumers.
Add to that the fact that in the last four years the internet added more than 17 million jobs to the U.S. markets. Not unremarkable is that the internet economy grew seven times faster than the total U.S. economy during the past four years.
As Microsoft CEO Satya Nadella put it on the most recent Microsoft earnings call, “If anything, some of these projects are the way they’re going to accelerate their transformation ... to improve productivity, because in an inflationary environment, the only deflationary force is software.”
Given the deflationary effects of digital technology you would think lawmakers would want to avoid any antigrowth policy that might hurt businesses and consumers.
Jerome Powell, Chair of the Federal Reserve of the United States, recently pointed out in testimony before the Senate Committee on Banking, Housing, and Urban Affairs, that, “At the aggregate level, the connection between concentration, for example, and inflation is really not clear. Some of the most—some of the industries that had a lot of consolidation were the very ones that drove low inflation over the last 25 years, you know, retail and wholesale, consolidated a whole bunch and a bunch of technology went in and that’s where there was very high productivity and very low inflation ”
Ways businesses can use technology to fight inflation
As inflation rises, businesses have found ways to use tech -- including automation, IoT and digital deflation -- to fight higher prices and labor shortages.
While CFOs look for ways to scale back and reduce spending, experts agree that businesses should instead take advantage of technology to reduce costs and get a leg up on the competition.
Tech helps retailers get ahead
In retail, businesses use technology to reach consumers in several ways. While retailers have used cutting-edge technology for a while -- think virtual fitting rooms or in-store augmented reality experiences -- not many have used tech in the pursuit of cutting costs to battle inflation.
Take retailers for example. They are taking advantage of technology to keep existing customers and bring new ones in.
1. Smart shelves
2. Frictionless checkout
3. AI and IoT
4. Digital twins (A digital twin is a virtual representation designed to reflect a physical object or process)
Robots and automation continue to cut costs
Robotics and automation can help reduce certain business costs. With self-service checkout lanes at the grocery store or robots sorting through inventory at a warehouse, these technologies continue to be go-to investments to help some businesses reduce costs. But with rising labor costs, there's an opportunity to increase automation and robotics adoption to offset this trend.
More than ever before, the number of possible automated tasks continues to rise. Several industries are increasing their automation adoption, including food processing, general manufacturing and electronics manufacturing.
An example of an increase in automation adoption to help reduce costs is in the hotel industry. With a labor shortage, rising rates and the shifts in travel habits due to COVID-19, hotels are enticing guests with automated self-service options. Guests can manage their stays from their mobile devices with automated systems, such as cashless tipping for housekeeping and contactless self-service check-in.
Another example is in factories and warehouses, where robotics helps with logistics and complex processes. By using robots to perform mundane, repetitive tasks, businesses can allocate their employees' time and effort to more critical and delicate tasks.
Robots have also helped businesses combat labor shortages during and after the pandemic. New robots are designed to augment operations and work in partnership with humans. Robots use AI to navigate facilities and perform tasks, such as sweeping floors, detecting spills, and sorting and delivering mail. Robots can also collaborate with employees and improve fulfillment processes.
Digital deflation helps mitigate inflation
While inflation threatens the profitability of businesses, it can also be a catalyst for businesses to analyze their spending and push forward with key cost-reduction strategies. This can include investing in technology to reduce long-term costs.
Digital deflation focuses on investing in technology with the goal of reducing business costs in the long term, according to Gartner. While spending can seem counterintuitive during inflationary times, implementing digital initiatives can lead to the deflation of business costs. Consequently, businesses can maintain profitability in the long term and pass along these savings by reducing the prices of goods and services -- essentially deflating an inflated cost bubble.
While most industries are feeling the inflation crunch, it's important to think innovatively and long term. Businesses should look for creative ways to use technology to their advantage, whether that involves keeping a loyal customer base or improving upon outdated systems.
A nice article on how to Use Technology in Your Inflation Fight and how Digital Deflation is key to Profitable Growth: gartner.com/en/articles/cfos-use-technology-in-your-inflation-fight
I chose TESLA to share this with you; i could had used Google or Apple and so many others....
or should i had used Crypto? That is a different subject we have touched before many times.
As you probably know i like Bitcoin : The primary factor that makes bitcoin a hedge against inflation is its limited supply of coins. When Satoshi Nakamoto created the world's biggest cryptocurrency, he embedded a hard-cap into Bitcoin's source code that limited circulation to 21 million bitcoins.
One Love,
the FXPROFESSOR
PS. thanks Elon for the pass. Plenty of food for thought
What economists know but the media generally ignores is that the public might not realize that digital goods and services typically reduce both actual and measured inflation.
Even as the economy hits severe headwinds and prices for gas, food and other essentials keep climbing, with inflation at a 40-year high, America is in the throes of the biggest business startup boom of a generation, according to the U.S. census. An incredible 5.4 million people applied for small business licenses last year—a jump of more than 50% from 2019 in an economy that is otherwise actually shrinking. In fact, despite a backdrop of so much gloom and doom, global investment in startups shattered records in 2021, hitting $643 billion—10 times what it was 10 years ago.
While the Bureau of Labor Statistics released the May 2022 Consumer Price Index showing overall inflation shot up even more than the month before, at 8.6 percent, Bloomberg reported on the Adobe Digital Price Index which showed inflation online actually was at 2%, with an .7% drop month-over-month, for the third month in a row of price drops online, with the majority of product categories online showing price decreases.
That’s not to trivialize the rising costs of essentials, like milk and housing for those who are struggling at the margins of economic viability, but online services and products do typically cost less than their offline counterparts. That is a bright spot for beleaguered consumers. Digital media platforms make comparisons for competitive prices easy. And digital tools spur productivity, supply chain efficiencies and cost savings on the supply side that mean lower prices for consumers.
Add to that the fact that in the last four years the internet added more than 17 million jobs to the U.S. markets. Not unremarkable is that the internet economy grew seven times faster than the total U.S. economy during the past four years.
As Microsoft CEO Satya Nadella put it on the most recent Microsoft earnings call, “If anything, some of these projects are the way they’re going to accelerate their transformation ... to improve productivity, because in an inflationary environment, the only deflationary force is software.”
Given the deflationary effects of digital technology you would think lawmakers would want to avoid any antigrowth policy that might hurt businesses and consumers.
Jerome Powell, Chair of the Federal Reserve of the United States, recently pointed out in testimony before the Senate Committee on Banking, Housing, and Urban Affairs, that, “At the aggregate level, the connection between concentration, for example, and inflation is really not clear. Some of the most—some of the industries that had a lot of consolidation were the very ones that drove low inflation over the last 25 years, you know, retail and wholesale, consolidated a whole bunch and a bunch of technology went in and that’s where there was very high productivity and very low inflation ”
Ways businesses can use technology to fight inflation
As inflation rises, businesses have found ways to use tech -- including automation, IoT and digital deflation -- to fight higher prices and labor shortages.
While CFOs look for ways to scale back and reduce spending, experts agree that businesses should instead take advantage of technology to reduce costs and get a leg up on the competition.
Tech helps retailers get ahead
In retail, businesses use technology to reach consumers in several ways. While retailers have used cutting-edge technology for a while -- think virtual fitting rooms or in-store augmented reality experiences -- not many have used tech in the pursuit of cutting costs to battle inflation.
Take retailers for example. They are taking advantage of technology to keep existing customers and bring new ones in.
1. Smart shelves
2. Frictionless checkout
3. AI and IoT
4. Digital twins (A digital twin is a virtual representation designed to reflect a physical object or process)
Robots and automation continue to cut costs
Robotics and automation can help reduce certain business costs. With self-service checkout lanes at the grocery store or robots sorting through inventory at a warehouse, these technologies continue to be go-to investments to help some businesses reduce costs. But with rising labor costs, there's an opportunity to increase automation and robotics adoption to offset this trend.
More than ever before, the number of possible automated tasks continues to rise. Several industries are increasing their automation adoption, including food processing, general manufacturing and electronics manufacturing.
An example of an increase in automation adoption to help reduce costs is in the hotel industry. With a labor shortage, rising rates and the shifts in travel habits due to COVID-19, hotels are enticing guests with automated self-service options. Guests can manage their stays from their mobile devices with automated systems, such as cashless tipping for housekeeping and contactless self-service check-in.
Another example is in factories and warehouses, where robotics helps with logistics and complex processes. By using robots to perform mundane, repetitive tasks, businesses can allocate their employees' time and effort to more critical and delicate tasks.
Robots have also helped businesses combat labor shortages during and after the pandemic. New robots are designed to augment operations and work in partnership with humans. Robots use AI to navigate facilities and perform tasks, such as sweeping floors, detecting spills, and sorting and delivering mail. Robots can also collaborate with employees and improve fulfillment processes.
Digital deflation helps mitigate inflation
While inflation threatens the profitability of businesses, it can also be a catalyst for businesses to analyze their spending and push forward with key cost-reduction strategies. This can include investing in technology to reduce long-term costs.
Digital deflation focuses on investing in technology with the goal of reducing business costs in the long term, according to Gartner. While spending can seem counterintuitive during inflationary times, implementing digital initiatives can lead to the deflation of business costs. Consequently, businesses can maintain profitability in the long term and pass along these savings by reducing the prices of goods and services -- essentially deflating an inflated cost bubble.
While most industries are feeling the inflation crunch, it's important to think innovatively and long term. Businesses should look for creative ways to use technology to their advantage, whether that involves keeping a loyal customer base or improving upon outdated systems.
A nice article on how to Use Technology in Your Inflation Fight and how Digital Deflation is key to Profitable Growth: gartner.com/en/articles/cfos-use-technology-in-your-inflation-fight
I chose TESLA to share this with you; i could had used Google or Apple and so many others....
or should i had used Crypto? That is a different subject we have touched before many times.
As you probably know i like Bitcoin : The primary factor that makes bitcoin a hedge against inflation is its limited supply of coins. When Satoshi Nakamoto created the world's biggest cryptocurrency, he embedded a hard-cap into Bitcoin's source code that limited circulation to 21 million bitcoins.
One Love,
the FXPROFESSOR
PS. thanks Elon for the pass. Plenty of food for thought
💎 BitMart VIP: bitmart.com/invite/FxProfessor/en-US – Find details on fxprofessor.com
🌟 CRGPT Token: Join the Crypto AI Revolution cryptogpt.io/
🌐 Public Telegram: t.me/fxprofessor88
🌟 CRGPT Token: Join the Crypto AI Revolution cryptogpt.io/
🌐 Public Telegram: t.me/fxprofessor88
Powiązane publikacje
Wyłączenie odpowiedzialności
Informacje i publikacje przygotowane przez TradingView lub jego użytkowników, prezentowane na tej stronie, nie stanowią rekomendacji ani porad handlowych, inwestycyjnych i finansowych i nie powinny być w ten sposób traktowane ani wykorzystywane. Więcej informacji na ten temat znajdziesz w naszym Regulaminie.