What causes inflation? Economists and the public disagree

Marketplace All-in-One

Marketplace

News, Business

4.8 • 1.3K Ratings

🗓️ 12 June 2024

⏱️ 7 minutes

🔗️ Recording | iTunes | RSS

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Summary

The general public doesn’t always see eye-to-eye with economists on why inflation happens or on how to fight it, a new survey finds. We’ll unpack. Plus, a resilient U.S. economy lifts global economic outlook. And later: The Federal Reserve is expected to leave interest rates unchanged today. But let’s revisit the ’70s and ’80s, when the Fed was battling double-digit inflation and didn’t have the luxury of patiently holding interest rates steady.

Transcript

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0:00.0	What causes inflation?
0:03.0	Economists and the public do not see eye to eye.
0:07.0	From Marketplace, I'm Sabrie Benashore in for David Brancaccio.
0:10.0	In about 30 minutes, we will get the latest measure of how inflation is doing these days.
0:15.1	The Consumer Price Index for May comes out.
0:17.3	In April, overall, inflation was at 3.4%.
0:21.2	But what exactly causes inflation? How do you fight it? Turns out
0:24.1	economists and the public have very different ideas. That is according to results of a
0:28.5	survey published recently by the National Bureau of Economic Research.
0:31.7	Marketplace as Daniel Ackerman has more.
0:35.0	Most people surveyed said government spending causes inflation.
0:38.4	That can be a factor depending on the program, but when asked what kind of government spending they're concerned about
0:43.6	People think that foreign aid from the United States is the number one source of
0:48.8	inflation. It's a joke.
0:50.8	Yuri Garan Nachenko is an economist at UC Berkeley.
0:54.1	He says there's no evidence that foreign aid has caused higher prices in the U.S.
0:58.6	But he's not surprised about discrepancies like this, because?
1:02.1	Economists are not people and people are not economists.
1:05.0	Or at least people don't always think like economists
1:08.0	who measure inflation using tools like the Consumer Price Index,
1:11.0	says Stephanie Stancheva, an economist at Harvard who led the survey.
1:14.8	The CPI, you know, the way we measure inflation is really highly imperfect.
	...

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