Editor’s Note: Have a question that needs no answer? Then ask Karine Jean-Pierre, since she tends not to have any. For all other questions, ask Matt at firstname.lastname@example.org
Dear Matt,Inflation is strangling us. Is there anything you can say to make me feel better about it? Becky A.
Though it might come as a shock to readers, I’m not an economist. But while I don’t wish to brag, I did pull solid C’s in Econ 101 and 102 in college. Not only because I browsed the reading and diligently attended about a third of the classes, but because I cheated. Or as I like to think of it, I looked at the average variable cost of my study output (too high), then looked at the girl sitting in front of me, then considered our double coincidence of wants - I wanted her test answers, she wanted me to stop reading over her shoulder. Then I asked if she wouldn’t mind slouching a little so I could reach utility maximization. (Just a little light econ talk….hope I didn’t lose the layperson.)
Of course, me being an Econ C-student seems to put me in good company with Joe Biden, Federal Reserve Chair Jerome Powell, Treasury Secretary Janet Yellen, and a host of administration Baghdad Bobs who also seem to have little-to-no idea what’s going on, failing even, to acknowledge that we’re in a recession. Yellen instead opts to call it “a period of transition in which growth is slowing.” (As CNBC reported, she might technically still be in the definitional safe zone, even though every two-consecutive-quarters of our GDP dropping, as it just did, has caused the National Bureau of Economic Research to declare a recession, going all the way back to 1948.) If only Yellen’s economic insights were as keen as her gift for euphemism. In March of 2021, she infamously said that inflation would be “transitory.” And indeed, the inflation rate was in transit, from the 2.6 percent it was then, to the 9.1 percent it is now. (Maybe Yellen should start cheating off the girl who sits in front of her, too.)
But you already know the news is bad. That’s why you asked me to find some punch in the turd-bowl. I racked my brain to think of some upsides, and here’s what I could muster:
1. Perhaps, with all the discomfiting economic news, White House press secretary Karine Jean-Pierre will be inspired to speak less in public. Because every time she does, my consumer confidence falls. You know things are dire when I feel compelled to link to an RNC Research tweet at all, let alone twice in the same piece. I hate to baldly state that she’s bad at her job – too cruel – but I am starting to feel like I owe Sean Spicer an apology. Lesson: think things are bad now? Cheer up, because they can always get worse. Happiness is transitory, to paraphrase our Treasury Secretary.
2. Good news: now that the Fed seems invested in a series of interest rate hikes to curtail inflation, you might actually get a return on your savings account for a change! Though the bad news: since half the country might have to sell their kidneys to fill up their cars or to afford meat that doesn’t come out of a can (some retailers are now locking up SPAM in anti-theft cases), you probably no longer have a savings account.
3. Misery loves company, and we have a lot of it. It’s fun for Americans to blame their pet culprit(s): the Biden administration, Putin’s war of aggression, OPEC (who deserves our enduring scorn, just as a matter of habit), COVID, supply chain interruptions, a diminished labor force fat on stimulus money, Ron DeSantis (I actually don’t know anyone who is blaming DeSantis for inflation, but I like to blame the culture-war galoot for everything, just to stay in game shape for when he runs for president). Though as with most things, the sources of our woe are more complicated and varied than the gasbag punditry lets on. And the woe is not unique to us. Think 9.1 percent inflation is bad? Pew Research crunched the worldwide numbers for the last two years. Portugal and Spain are seeing well over ten times what their inflation rate was in the first quarter of 2020. Italy and Greece hover around 20 times the same. And Israel is topping off at 25 times their old inflation rate, which might, at least, make Prince Harry happy. (He’s not a big supporter of the Jews.)
Among the 44 nations Pew collected the numbers for, the United States, for its part, ranked 19th in climbing inflation. China, for its part, being the nation that kicked off this inflationary spike after introducing the world to COVID, ranked dead last. In 2021, China’s inflation rate was around .85 percent compared to the previous year. Meaning, China ought to be sending us reparations checks. I’m happy to take mine in Yuan, since my dollar doesn’t go very far anymore.
4. Finally, when I launched Slack Tide last October, a paid subscription costs five bucks per month or 50 bucks for the year. (Which for you math whizzes, breaks out to $ 4.16 a month.) And with all this inflationary pressure? It still costs the same! That means zero percent inflation. You’re welcome. Become a paid subscriber now.
But that’s about all the sunny-side I can come up with. You see why they don’t ask me to volunteer down at the suicide-prevention hotline. I will, however, take this to group and await the wisdom of the crowd.
Conversation starters: What the hell is happening, and how do we get out of this cycle? Where does this inflation train finally let us off? Who or what is primarily to blame? What do you miss buying most, besides gasoline and food? How have you changed your spending habits, or are you a one-percenter who maintains that the crisis is overblown, from the comfort of your villa in Ibiza? And why is it pronounced Ihh-beetha instead of Ihh-beeza? Can the rich no longer afford to get their speech impediments fixed?
I’ll let you go to it, but as always, be respectful. This is a civilized corner of the internet. Let’s keep it that way. No cursing, no abusing, no high-sticking.
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Well Matt, I’m a [blissfully] retired engineer. My obligatory Econ 101 was ironically taught by a visiting Chinese National Professor whose English was . . . [insert your own euphemism]. I remember something about guns and butter but little else.
As with a lot of issues you throw out for us, these are neither one dimensional nor partisan problems. Having said that, It seems to me energy independence would be one part of the solution to many of our economic problems, including inflation and GDP growth.
ps: I went fly fishing on the Yakima River in Washington state last month and thought of you as we landed (and released) blue ribbon rainbows.
To ensure you know how very much I value your writing, as I stood in Walmart salivating over that $5 can of Spam...I CHOSE YOU! Yes, I value you at least that much. 😍
as always in any crises period those that can least afford the ravage of inflation are the ones that suffer
the dearest. we need to stop subsidizing the chips industry as an example. intel ceo took home 179
million, yet his industry needs a subsidy to build some chip manufacturing facilities here in the u s a.
if all the politicians are against inflation and unfair taxes why do we have inflation and unfair taxes?
congress is in charge of fiscal policy. why can't we make them do their job? congress writes the tax code. do they treat the rich and the poor equally? of course not. forget the yellens and the winken blickens and nods and hold the congress's feet to the fire. maybe then we get closer to a nation that
treats all men equally.
Oh, my gosh. Your wife is a keeper
I am well disposed to acquire this vehicle (since I cut my teeth on a standard transmission). I won't consider the 'half-tank of gas' as a legit fee though.
Let's talk this through. I am in Ohio but have a base of operations with fam in Virginia. Are you anywhere east of the Mississippi?
I was an English major, so I would have been laughed out of the economics department in college. I know about supply and demand, and that there's a big central bank (I think it's called Gringotts, and it's run by trolls) that works with the Treasury to buy something, and then transfer something else to somebody, and then new money magically appears. And if we're really good, bobble-heads in suits will give us some of that money in checks.
But the magic somehow runs out, and then a run to the grocery store costs as much as my daughter's appendectomy.
Yeah, it's definitely called Gringotts.
What I learned in Econ 101 was the difference between needs and wants. The result of companies changing their prices is we all have to look closer at what we need and want. If it helps, if you need to adjust your subscription price, I'd be glad to pay as much as $8 a month. That's only $2 a week, $96 a year. HECK, round it up to $100 a year (I'm always glad to pay extra for round numbers.) On they other hand, the New York Times has raised my subscription to $660 a year -- up about 15% from about a year ago. And the only thing that is compelling me to keep it is that it gives me a record of my long streak for Wordle wins. I'm starting to think I don't need that so much. But I've come to need to read a couple of your articles a week. Thanks so much.
I don't understand all this hubbub over inflation when such a simple and easy solution is right at hand, and we need only look a bit into the past to find it:
Anybody here remember those? Raise your hand. If your motor function still allows you to, that is. For the youngsters who are unfamiliar:
As low-tech, cheap, and as easy to produce at scale as pretty much any widget that any economics teacher ever spoke of in any economics class. And they can be quite fashionable and a boost to anyone's wardrobe!! I think Matt would look pretty darned cool with one tastefully pinned to his favorite fishing chapeau!!
Of course, they won't be quite as cheap to produce as they were back in the day, due to, uh, inflation. And there might be a supply chain issue or two. Or three. And of course, we'd need to find a way to get some of those slackers off unemployment and out their parent's basements to make the darned things.
But wait...we've got robots now. But I guess there might be a supply chain issue or three there as well, along with a labor issue if we want to make enough of them to make the buttons. But wait...we could just have some robots build the robots. Yeah, that's it. All we need now is for Congress to pass a bill pulling the trigger on a sawed-off double-barreled money gun pointed somewhere in the general direction of this button problem, along with stipulations that whatever corporate types who get the contracts won't overcharge - at least not excessively - for their services and product (they likely wouldn't do that, being as this would be such a patriotic endeavor and good for the country, but you never know) and it will no doubt not be too long before inflation is no longer a hot button issue, and we can all go back to bitchin' about something else that's perhaps not as frustrating as not being able to afford one's desired lifestyle...or maybe one's supper.
See...not really all that complicated. Don't know why these economists gotta' make it seem so hard. Maybe because some have got their eye on that Nobel Prize thingy and want to look a little extra smart. But you know, $1M+ just really ain't what it used to be, what with, uh, inflation and all. But I hear they throw in a pretty nice gold medal in the deal, and some of those guys probably prefer medals to buttons, as they are a bit more fashionable.
Having read a number of the comments, I have donned my word flack jacket. I too, ran through Econ 101 at the hands of one of the most profound monotonic speakers ever. Now had the subject been sex education, probably not so bad but Econ? I find economic policy during my lifetime to be reflexive rather than future looking. When events in the economy cause worry, our captains make adjustments to the course, if they can, and the storms abrewing are not to much to handle - like the bundled mortgage financial instruments unraveling a few years back. Not to mention, of course, the great depression, 1929 to 1942, which the US weathered with some severe belt tightening and a major World War. Let's hope today's inflation eases off without the need for such draconian action. If you want an easy primer in economic policy, look at the purchasing power of the dollar against real goods over the past 100 years and compare that curve to the curve of the National Debt over that same period. Notice anything? Yeah, the more we borrow, the poorer we get in actual purchasing power.
Finally, it is Matt's column. His views hold sway and his humor is, well, his - good (mostly hilarious), bad (rarely) or indifferent. I am a registered republican who votes near always democrat. Matt clearly struggles as I do with the Republicans but no need to give bad policy a pass regardless who is in office.
My Econ 101 professor told us the first class, don’t worry about studying for my test, you can’t pass it! Just remember, supply & demand, while holding up his money clip!
So where are we?
Brilliant. Again. Thanks!
Culture-war galoot! Somebody just won the internets today!!!!
I was chuckling with a friend the other day (because who doesn't like to chuckle?) about gas prices. How come, for the last year, Biden and all his sycophants were saying the president doesn't control gas prices, and now that prices are coming down slightly, he's posting and boasting about bringing down the prices of gas?
And, while we appreciate inflation not hurting the subscription rate, Matt, it also hasn't affected the cost of a Mega Millions or Power Ball ticket. I statistically have a better chance at becoming a billionaire by playing the lottery, than I do reading your column. That's because I'm stupid at the maths, too. And your column is funnier.
Very disappointed in the cheap hit on Prince Harry. Very Tucker-esque. To take a picture from 15 years ago at a costume party and extrapolate that to being an anti-Semite is not only not funny, it's something the NY Post would do. You are better than that, I hope.
As far as the inflation thing, there are three factors at play:
Years of easy money from the fed to keep the economy propped up while the boomers were in their prime earning years and the tea party contracted the economy coming out of the great recession by insisting on insufficient stimulus because Obama. That's the main reason for the housing bubble.
The twin shocks of emergence from Covid lockdowns in most of the world (except China, which is making supply chain problems worse) and the war in Ukraine.
The asinine way that inflation is calculated by the government is distorting the actual rate of inflation. Right now, Americans have bought all the electronic toys and stuff that is actually cheaper than it used to be that they want, and are now all trying to buy the same perishable goods.
As someone else pointed out below, there is not much wage pressure on prices, contrary to breathless news stories about the "great resignation". The forward yield curves are predicting a return to 2-3%, or lower inflation within a year or 2. People just need to calm the F down.
I think Janet Yellen is over-parsing when trying to allay people's fears, but she is an academic and not the most plain-spoken person. Still, she's very smart, and i have faith in her and her team.
HAH! [*SQUEAK!*] [BMM-BMM-BMM!] IS THIS ON? CAN EVERYONE HEAR M[*SQEAK!*] [POP!]
Hi. Longtime caller, first-time listener. Thank you for this town hall. I'm here to tell you that Donald Trump set us free. Not only has the inflationary pressure that pumped up his ego spilled over into the economy. That louder-than-life ambulatory priapus of a man (and I use the term loosely) has finally given rise to prices on everything under the sun. Yes, I know. I said "rise." [snort]
Speaking as another boring old white male from Central Redneck County, and on behalf of my fellows, Donald Trump has set us free. He's taught us that we're equally entitled to our grievances. And he did so without teaching. Because one of the primary tenets of Redneckhood is to shun teaching and education of any kind. If you learn anything, keep it to yourself and don't show off. Or we'll kick your ace, get it?
Me and my pro-Trump fellers would privately like to take pity on the rest of America for the offensive language, the crude banality of his cruelty--but we so much enjoy inflicting more of the same. It's fun! So funk your feelings!
You people in the eeeelite meeeedia caused this inflation! It's all your fault. More importantly, it's not our fault. We voted for Trump to tear it all down and dump it into a drainage ditch, uh, swamp. And if you guys can have your grievance culture--*so can we, Buster!*
Anyhoo. Thanks for the laughs. Is they any free tacos left at the buffet? Is it Toozdy? [*FFFSZHTTS*] here, take it [SSSKKRRTSH!]
Trying to remember why I paid for this.
I made about the same grade as you did on introductory economics at UNC, but what's happening, and has happened over the last 40+ years doesn't need a practitioner of the dismal science of economics nor, as Harry Truman requested, a one-armed economist to explain. (Remember that he tired of the economists who droned on, "On the one hand...On the other hand"?) Having lived through the last inflationary cycle, I know we've been through worse. In 1982, inflation was 6.16 percent, and joblessness reached a post-World War II high — 9.7 percent of the labor force. Ronald Reagan had a 41% approval rating in August, 1982, the lowest ever in a Gallup Poll for a president early in his term. More for a look back and a look forward. https://jimbuie.substack.com/p/inflation-is-at-a-40-year-high
To those of you who think the Democratic Party, or Joe Biden, or the Saudis, or the Russians caused gasoline pri ces to skyrocket, think again. This story comes from the far left, business hating, socialist, media fringe, FOX News: https://www.foxbusiness.com/markets/exxon-chevron-shell-profits-soar-oils-surge
You should have been my friend. You wouldn't have had to pull a muscle in your neck to get a glimpse of my answers. I would have taken my test and then switched with you and taken yours too. I did this for my BFF in college and sometimes for my college roommate freshman year, who was also a good friend. I was an English major so no expertise in econ, but I blame all the COVID aide and waiting too long to raise interest rates. And Title 42. We need those workers back.
Would that as much effort would go in to accurate economic planning and forecasting as has gone into redefining the parameters for a recession.
In another highly complicated economic question, what’s with the victory lap on a $.25 drop in gas prices (against a $1.30/gallon increase BEFORE the war in Ukraine)? If you campaign to end the fossil fuel economy, you should be apologizing for giving a reprieve to Big Oil.
Distraction, Matt! I thought for a second there that you were using inflation/Karine/Biden et al to distract from the news about Gaetz/Stone. Then I realized chances are good you didn’t read HCR’s and important writing about the “hot mic”. But the definite slide into the R’s talking points is starting. Is that to ease us into seeing your true position in time for an election year? Curiouser and curiouser…
I not only know very little ( I did take Econ 101 in college and got a A , but, I promptly forgot most of it after the tests...lol) about economics, I find it incredibly dry and boring...
Gas prices have come down $2.80 a gallon here, so, not back to where it was, but, miles better. The alast time I filled up it was $8 less than the time before.
Food prices have gone up, but, I am no stranger to cutting back on some of my champagne tastes when needed...lol...where it has really hit me is something I like/want, but isn't a necessity...entertainment , and subscriptions...
Also, some of my utilities went nuts, I redid my cable/internet /phone one as a result...brought it down about $91 and got everything I really needed.
Maybe I am just disinclined to get upset about financial woes, been there, done that, several times, both economy wise ( inflation and recession ) and personal not in my control events.
While I wish it wasn't so, wishing doesn't make it happen...lol..I survived the other times and hopefully will survive this time too. ( I was never as poor as I was during and before the cancer/chemo, and it sucked, but, maybe I am just a ridiculously stoic sufferer?...lol)
seems to me that "two consecutive quarters" is no longer, or at least not the only, appropriate definition of a Recession.
Cue to This Fella in a dream induced by recent medical procedure: - He dreams of a world where Politicians will just talk the truth and not be so concerned about re-election. Americans would pay attention to quarterly profits during these inflationary times, not just in their 401ks, oh wait, weren't oil companies divested?
Oof, time for vital signs again?
Dream scenario brought on by Oxycodone and Tylenol.
What I miss buying: Not me….but my two millennial daughters want to buy homes but have given up for now. There’s NO WAY inflation is at 9.1% because of the lame way they compute housing, owner’s equivalent rent….not what people actually pay for rent. It is probably more like 15-20%.
# 4 was masterful transition to luring in paid subscribers, well played sir. As far as pronunciation, how about Aix en Provence, that's tripped up a few would be francophiles of my acquaintance. I've avoided trendy Spanish islands so far.
I JUST PAID 6.79 FOR A BAG OF FAMILY SIZED TOSTITOS!!!! I would’ve given them to the cashier but I was at a self checkout and didn’t want to create a kurfuffel.
As long as there is no wage/price spiral, which there doesn’t appear to be, then inflation is self correcting. It’s a shame that it corrects itself by making you broke... or more gently put reducing your disposable income. With the Fed also reversing QE and raising interest rates at a hefty clip, my guess is inflation is running at target by year end.
The British call it Eye-Beef-Ah, with an F
Ibiza is pronounced ee-beeth-ah because it is the name of a Spanish island, not an English one. Spanish people speak with Spanish pronunciations. Grathias. And yes, that's the way you pronounce "thank you" in Spain Spanish...but not in Mexican Spanish.
Would someone actually look up the facts and figures of Q1 and Q2 PROFITS of big oil. The price of a barrel of oil has been well over $100.00 numerous times, but Shell Oil and their ilk have NEVER had 300% profits in one quarter over the same quarter the previous year. Can you pronounce profiteering. Big Oil stocks have gone up over 50% this year, while the overall market has dropped over 20%. But, give Shell a break. They have to be reponsible to their stockholders. Btw...what are stock buybacks? Wink.
What a wotten thing to do attacking the wich for our shpeech impedededediments!
See Matt Stoller on that ...but you can start with the food processors,drug companies and the big maritime shippers .
Wild that we are not taking a closer look there .
Matt Labash writes: “Of course, me being an Econ C-student seems to put me in good company with Joe Biden, Federal Reserve Chair Jerome Powell, Treasury Secretary Janet Yellen, and a host of administration Baghdad Bobs who also seem to have little-to-no idea what’s going on, failing even, to acknowledge that we’re in a recession. “
I don’t know you, Matt, well-enough to know if you’d care, but your formulation seemingly comparing yourself to our country’s dominant practical economists, is an effect that many use to undermine opponents with an admittedly inadequate basis for doing so. You manage both to punch yourself up (putting yourself in substantial company) and to punch the others down (such as by leading readers to imagine Janet Yellen looking over someone’s shoulder in an Econ class, trying to cheat).
The late Rush Limbaugh (among others ) perfected this trick. If you listen to the post-Limbaugh iteration, Travis and Sexton, you’ll hear similarly dismissive statement about, say, any Democrats and also about, say, all Democrats.
“Bless Yellen’s and Powell’s and, God Help Us, the sitting President of the United States’ pointed, little heads. They mean well, but come on! They’re Democrats! Now how about a word about MyPillows®.”
It’s a damn “trick,” that works for comedy, but currently plays an outsized role in undermining credentials and Credibility, and thereby enhances a who-can-you-trust-ness throughout our society.
“Heck! We might as well trust Matt Labash as these credentialed others, because they’re no better than he is, and he knows nothing about economics, so they know nothing about economics, and a situation with improving job numbers is a Recession, the label is what matters, and who gives a darn about anything else? Inflation is globally systemic, not a domestic phenomenon, and Chairman Powell puts his pants on, one leg at a time, same as me, so I don’t even know what a Recession actually is, but it shows the Democrats don’t know what they’re doing, four-thirds of the time, and Hillary’s emails. Libtards! Sheesh!”
Your writing here, as always, is well-done and clever. Your base point disappoints, in terms of seeking to help make our divided country a better place.
I’d have said this privately, but (A) I’m not sure I know how to do that on the Internet and (B) I’m hard-pressed to imagine that even such a thought-ful person as You is going to give much thought to This.
They overlearned the lessons of 2008, which were themselves an underlearning of a lesson from...somewhere else probably. Also, economics is hard, which is why everybody falls back on their tried and true priors (it's all the communists'/business barons' faults!). This is probably gonna make the MMT crowd less powerful, so there is that. For me personally, the counterfactuals, where we threw too LITTLE money around are a strong argument as to why things could be worse if we did that again. I am now eating more beans, which I had been meaning to get around to. This inflation situation could really end up crimping the market for heart-surgeon yachts. That always stings the most.
I think there was only one guy in my high school who understood chemistry. And thanks to him, 30 others got a D. Whew!
Isn't inflation just another form of a price increase ?
Three years ago when you cable bill went up 10 % no one seemed to care.
If we can't survive a 10% price increase by being smart about how we spend we are all forked !
We’re doing what we’re going to do … inflation or not. Right now we’re building a house. You can imagine how that’s going, given that we bought undeveloped land and need a well, septic field, fencing, well house, and storage building in addition to the house itself. Is this wise, you may ask? Of course not! And yet we bulldoze forward.
I've never taken a single course in economics, but I don't feel that should preclude me from chiming in on this conversation. With my limited knowledge in how the economy works, I struggle with distinguishing a recession from a depression. All I know is that either situation means we have money problems. That said, I'm married to a man who, since our marriage in 1974, has been predicting the next Great Depression. I've always made a bit of fun of him, even to the point of storing a bunch of clothes in the 70s and 80s and labeling them "Depression Clothes." Now it looks as if I might be hauling that box from the attic, although I'm sure none of those clothes still fit. It has taken almost fifty years, but it looks as though I'll have to admit my husband was right. I hate it when that happens.
Who cheated on the exam, not me. It was the French 200 exam, I didn't know French for " umbrella ". I nudged Jim sitting across from me, to ask. Jim moved his sweater, which was hiding the dictionary. He flipped through it... and told me " la parpluie". Did I cheat ? Did Jim cheat ? Did I make Jim cheat ?
We are all sinners in search of salvation.
Karine Jean Pierre may not be great but she'd have a hard time following the woman who was perhaps the best press secy in my old lifetime. So I cut her some slack (and don't listen to her).
But Sean Spicer owes us ALL an apology -- and will forever owe us more of an apology than we get even if we got one (and he got self awareness)!
Re: Inflation -- I don't even play an economist in my own living room, but I do think the primary reason for the fact I cannot afford food or gas is GREED -- have you SEEN the IMMENSE profits of the oil and gas industry, Bezos, Musk, etc etc etc the past two years and now!!??!! It is also the war in Ukraine and the incredible mishandling of the pandemic and probably bad advisors in a couple of White Houses. But Greed and Politics (and the Politics of Greed) are literally killing actual people (as opposed to the rich and politicians).
It is worth bearing in mind that inflation creates winners as well as losers. Consider the case of a guy who is paying one third of his monthly income on his mortgage. As long as his salary or his pension has COLAs, given enough inflation he winds up paying only a fourth of his income for that purpose. Obviously he's a winner. But without COLAs he's of course a loser.