Yesterday the Bureau of Labor Statistics issued the June CPI numbers. We are now running at an annual inflation rate of 9.1%, up from 8.6% last month. This is the largest 12-month increase since November 1981. The BLS defined the increase as broad-based, with energy, shelter and food being the biggest contributors. Energy The energy index rose 7.5% overall after rising 3.9% in May. gasoline 11.2%, natural gas at 8.2%. Electricity index also rose 1.7%. The energy index overall rose 41.6% for the year, with gas rising Shelter The shelter index increased 0.6% in June, as it did in May. Rent index ..read more

You may have have heard the term Greedflation floating around lately. What is “Greedflation,” where did it come from, and are there merits to the idea? In this episode we will be looking at a NY times article by Linda DePillis called “Is Greedflation Rewriting Economics, or do Old Rules Still Apply?” A link to the article is in the show notes.  From the article: Since prices started to escalate a year ago, politicians and economists have seized on inflation to tell their preferred story about what went wrong, and what policies would bring it back into line. Some say it’s very st ..read more

Today Nicolás Águila will be joining us from Germany. Nicolas is a doctoral researcher in Economics (@nicolasaaguila) at the Unizersitat Witten in Germany. He co-authored a paper with Juan M. Grana in the International Review of Applied Economics called “Not All Zombies are Created Equal." https://www.tandfonline.com/doi/full/10.1080/02692171.2022.2045911 He also co-authored a more conversational article in Jacobin discussing Zombie companies which I will link to. It’s called “The Rise of Zombie Firms Risks Another Disastrous Crisis”. https://jacobin.com/2022/05/zombie-firms-neoliberalism-d ..read more

The Crisis Sri Lanka has recently fell into default for the first time in history (since it’s independence in 1948) as the government is struggling to halt a full-scale economic meltdown. 22 Million people live in the Southeast Asian island nation officially known as the Democratic Socialist Republic of Sri Lanka. The government recently missed a $78 million interest payment, even after the 30-day grace period. There is a $105 million payment to China that is also late and its grace period is approaching. They currently owe $25 billion to foreign creditors but cannot pay them. $7 billion is pa ..read more

Ben Bernanke recently wrote a guest essay in the New York Times where he compared the current inflation situation to the 1960s and 1970s inflation episode, which he called "The Great Inflation". Mr. Bernanke explained what he saw as the differences and similarities to our current inflation, and how we are "almost certainly not" going to repeat that experience.  His argument seems to hinge on two facts: 1.) The Fed currently has much more policy independence than it had in the 1960s and 1970s, so they will be able to do their job more effectively without presidents or Congress trying to me ..read more

For this episode I'm reading selections of two reports -- The World Bank's June 2022 Economic Prospects Report and David Wilcox's "The case for a cautiously optimistic outlook for US inflation." Links to both reports are at the end of the show notes.  Economic Prospects Report The global economy is in the midst of a sharp growth slowdown following the extraordinarily strong rebound last year. This slowdown coincides with a steep run-up in global inflation to multi-decade highs. Looking ahead, growth over the next decade is expected to be considerably weaker than over the past two decades ..read more

Inflation was expected to “remain elevated” ahead of today’s announcement, but instead it roared ahead to a 40-year high to 8.6% from 8.3% last month. Groceries are up 11.9% year-on-year, gas is up 48.7%. For the last few months, we have March: 8.5%; April 8.3%, May: 8.6%. Analysts were hoping that that the 8.5% in March was going to be the all-time high and we were going to taper from there, but it’s looking like we may not have even topped out yet. Also, it’s worth noting that prior to 1980, the CPI was simply the cost of a basket of goods. Now we have substitutions, Owner’s Equivalent Rent ..read more

How much retirement savings does a person need to retire safely, making sure they don’t run out of money? As someone with relatively simple tastes and I’ve always imagined that with a nest egg of a couple million dollars I wouldn’t have trouble retiring without touching the principal. I came to this conclusion by using the 4% rule — a conservative investing rule that seems more like a rule of the universe than any specific thing someone came up with. But there is, of course, a history to the 4% rule. The History of The 4% Rule William Bengan, a financial advisor, first devised the 4% retiremen ..read more

Episode 2: Why are gas prices getting so high? Will we see $10 gasoline? Gasoline is something that economists call a relatively inelastic product, meaning that changes in price have little influence on demand, at least in the short term. This makes sense, as much travel isn’t discretionary (commuting, etc.). In contrast, air travel is highly elastic, with a 10% increase in the price of air travel leading to an around 12% reduction in the demand for air travel. With car gasoline purchases it is closer to 3.4% reduction for a 10% increase. There has been some recent data suggesting it’s becomin ..read more

On May 31st Joe Biden wrote an op-ed for the Wall Street Journal titled: "My Plan for Fighting Inflation: I won't meddle with the Fed, but I will tackle high prices while guiding the economy's transition to stable and steady growth." I think it's important to read this op-ed to see where the administration is thinking is regarding inflation and how much of a priority they are going to make lowering it.  --- Send in a voice message: https://podcasters.spotify.com/pod/show/inflationpodcast/message ..read more