The Big Inflation FAQ: Why It’s So High, How Everyone Got It Wrong, and What's Next

Plain English with Derek Thompson

The Ringer

News, News Commentary

4.7 • 2.1K Ratings

🗓️ 13 June 2022

⏱️ 49 minutes

🔗️ Recording | iTunes | RSS

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Summary

Inflation is the story that everybody keeps missing. In 2020, many people didn't expect inflation to rise. Wrong. In 2021, many expected inflation to be brief or "transitory." Wrong. Last month, many expected inflation to peak. wrong. In May, inflation reached its highest level in more than four decades. But there’s a bigger story to tell here. What are the subtler inflation numbers telling us about the future of the economy? And is the media being too pessimistic about the economy given how strong the labor market has been coming out of the pandemic? To answer those questions, Derek welcomes Justin Wolfers, a professor of public policy and economics at the University of Michigan. As you’ll hear, Wolfers is brilliant, straightforward, and incredibly un-shy about telling Derek when he thinks he's full of it. If you think Derek is full of it, or if you would like to drop a more complimentary line, send your notes, questions, and curiosities to PlainEnglish@spotify.com Host: Derek Thompson Guest: Justin Wolfers Producer: Devon Manze Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	What's up guys Rachel Lindsay here and I am teaming up with your favorite
0:04.0	Ringer podcasters to deliver the bravo drama and news that you've been craving on
0:09.0	morally corrupt. It's the show about all things bravo from the housewives to
0:14.3	summer house and everything in between. We'll be mentioning it all every week.
0:20.0	Check it out on Spotify and the Ringer.com.
0:22.9	Today's episode is about inflation. How the media tells the inflation story and how
0:33.5	economists see the inflation story. Quote, US consumer inflation reached its highest level
0:39.6	in more than four decades in May as surging energy and food costs pushed prices higher
0:45.8	with little indication of when the upward trend could ease. End quote, that was elite paragraph.
0:52.8	From the Wall Street Journal's front page on Friday. Here's the top of Bloomberg Friday afternoon.
0:59.5	Hot inflation and flagging sentiment up the ante for Fed Biden. Consumer price index rises 8.6%
1:06.9	in May fresh 40 year high. Sentiment gauge plummets to a record low on higher prices.
1:14.0	But there's no question that inflation is an economic nuisance and a political problem right now.
1:19.3	Maybe the political problem for Democrats. Gas prices breached $5 for the first time ever
1:24.7	in the US in the last week at the same time that food inflation breached 10% for the first time
1:30.2	since 1981. Anyway, you put it together. It looks pretty bad for the ruling party.
1:36.9	But there is a bigger story to tell here. That question is what are the subtler inflation numbers
1:42.5	telling us about the near future and medium term future of this economy?
1:47.3	Extripping out the volatile numbers like energy and food, what is core inflation telling us
1:53.2	about the US economy? What is it the Fed's most likely to do in the next six months and how might
1:58.5	interest rate hikes ripple through the housing market? And is the media just being too pessimistic,
2:04.2	too Debbie Downerish about the economy given, for example, the strong labor market coming out of
	...

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