I agree--when most people say they are upset about inflation, they really mean high prices they have difficulty paying, but, failing a major economic downturn, are in most sectors of the economy not likely to return to where they were pre-Covid. This to my mind puts pressure not just on Republicans, but also on Democrats, who at some point will have to articulate much more clearly what they would do to increase affordability. Presumably this would include, among other measures, a major boost in the federal minimum wage, government medical insurance subsidies, and child support as well as a more progressively structured income tax--all of which would, of course, be fiercely attacked and opposed by Republicans. That said, in advance of the 2026 elections it behooves Democrats to lay out in laymen's terms what they are offering should they win.
Thomas Kaiser has captured the key issue. Below the top 10% or so of household income, people are dealing with incomes that are too low to adequately meet their cost of living. High rentals and mortgages, childcare costs, automobile payments, insurance premiums, and groceries add-up to making the cost of living unaffordable for way too many households. Even if inflation moderates, existing levels of income make financial and work life precarious. Indeed, this should be a core focus for Democrats in 2026.
Your core focus list already is their/my focus list. Seems like all dropping opinion polls on this admin (poor term for these guys but …) are reflecting this right now. Dems & indies have no decision to make - this is it! The objectives no one can dispute. How ?
Repubs will continue to blame prices on Biden but their usual MAGA pitch of slashing government to put $ in your pocket has run out of truth ( for now).Young voters are now turned off - jobs are hard to land if at all, living at home continues to be a depressing condition …
Dems “how” - it seems - has to be way more locally or regionally attuned. A nation of regional capacities and conditions. Measurable for sure.
Yes, they're accurate. Given the number of BLS statisticians et al who put these reports together, it would be **very** hard for anyone to cook the books without a whistle being blown. The admin now gets this, I believe, which is why they're turning to gov't shutdown and non-release, vs. tweaking the numbers.
Just imagine if inflation clocked in at 3% and Joe Biden lied that inflation was zero. The double standard in the media is a big part of the destruction of our country.
Are the BLS inflation numbers reliable? Prices seem very high and getting higher, like the water in the frog pot. Could Trump have had his corrupt focus on the agency ever since he threw a tantrum and fired the Director a few months ago? I know his pick for a replacement from the Heritage Foundation withdrew, but there's been no news since. Whenever Trump goes this quiet, I worry. He's like the 18-month old who's suddenly very focused on his diaper.
Nerd question for you, Jared: The CPI is reported to six significant digits (e.g., 324.368 last month), but I always see the monthly increase in the headline number reported to only one (i.e., "0.3%" instead of "0.31%," or even "0.310%"). Why is that? Is the uncertainty in the BLS number really so great that we can only know the monthly change to ±0.1%?
I'm not sure of the answer other than tradition: GDP growth, unemp rate, CPI and PCE inflation, many others, have always been reported to one decimal place. One reason that makes sense to me is that if you go to two, then why not three, etc.
It's don't think it's uncertainty, but to go very far beyond tenths or hundredths would imply a level of precision that goes beyond the data.
Why would an inflation rate meaningfully above target (and not slowing) with a somewhat weak labor market (although unemployment seems under control) lead to a near certain rate cut (futures indicate a 97% chance), especially when the Fed has a reputation for either doing nothing when risks are in conflict or favoring inflation control?
Mostly no. If inflation were well above target and not slowing, then unless there was something clearly temporary driving up inflation, the Fed would be quite unlikely to cut, even if the job market were soft (ie, stagflation). What's happening now is that they think inflation, but for the tariffs, is gradually heading back down to their target, so most of them are comfortable cutting. But if they thought inflation was sticky NOT because of the tariffs, but because of something more lasting (eg, people expecting higher inflation) they'd be less likely to cut.
The idea, as Jared posted, is that consumers pay more attention to the price levels rather than price changes (i.e., inflation rate) when making purchases. I think the Consumer Sentiment is really important.
An increased price level is when eggs cost twice as much today as they did a year or two ago - and that price isn't going up or down, it's just the new normal. Price inflation is when the eggs cost more this week than last week, and last week they were higher than the week before, etc. - a new higher price every week.
I’ll try to clarify my question: it seems to me that an “increased price level” and “price inflation” are the same thing. Possibly the intended difference is between actual price changes and the rate of that increase. Certainly consumers don’t care about the rate of increase but they do care about the higher prices.
I was trying to make the point that “increased price level” and “price inflation” are both higher prices. The inflation can be prices and/or the rate of increase.
They're related but not the same. The level is what things cost. Coffee costs about $9 right now, according to BLS. That's its price level. But it's up 19%(!) over the past year. That's its inflation rate.
Your point is well taken in that inflation raises the price level and high inflation raises it a lot! BUT, my key point is that when people are unhappy about the price level, telling them "but inflation has slowed a great deal!" doesn't assuage them at all. It's just telling them that the price level that they're already annoyed about is going up more slowly than it was before. But they want their old prices back!
(BTW, for that to happen broadly, you'd need a pretty deep recession!)
Thanks to Carol Ann and GSF for helping to clarify.
TACO, with T “chickening out” and Putin and the Chinese bravado who knows? The stability of the economy in the face of worldwide uncertainty is surprising… are the “magnificent seven” holding up the market?
How would T react to a market dive? Should I buy gold? Or stock in White House renovation companies?
I agree--when most people say they are upset about inflation, they really mean high prices they have difficulty paying, but, failing a major economic downturn, are in most sectors of the economy not likely to return to where they were pre-Covid. This to my mind puts pressure not just on Republicans, but also on Democrats, who at some point will have to articulate much more clearly what they would do to increase affordability. Presumably this would include, among other measures, a major boost in the federal minimum wage, government medical insurance subsidies, and child support as well as a more progressively structured income tax--all of which would, of course, be fiercely attacked and opposed by Republicans. That said, in advance of the 2026 elections it behooves Democrats to lay out in laymen's terms what they are offering should they win.
did the price of gas get below Iraq invasion prices? i.e. $.97 gallon?
Many good questions that I’ll answer later today when I’m recovering from root canal!! Eeeeks…!!
Thomas Kaiser has captured the key issue. Below the top 10% or so of household income, people are dealing with incomes that are too low to adequately meet their cost of living. High rentals and mortgages, childcare costs, automobile payments, insurance premiums, and groceries add-up to making the cost of living unaffordable for way too many households. Even if inflation moderates, existing levels of income make financial and work life precarious. Indeed, this should be a core focus for Democrats in 2026.
Your core focus list already is their/my focus list. Seems like all dropping opinion polls on this admin (poor term for these guys but …) are reflecting this right now. Dems & indies have no decision to make - this is it! The objectives no one can dispute. How ?
Repubs will continue to blame prices on Biden but their usual MAGA pitch of slashing government to put $ in your pocket has run out of truth ( for now).Young voters are now turned off - jobs are hard to land if at all, living at home continues to be a depressing condition …
Dems “how” - it seems - has to be way more locally or regionally attuned. A nation of regional capacities and conditions. Measurable for sure.
I find the administration’s credibility on everything as suspect. So are these numbers they released accurate?
Yes, they're accurate. Given the number of BLS statisticians et al who put these reports together, it would be **very** hard for anyone to cook the books without a whistle being blown. The admin now gets this, I believe, which is why they're turning to gov't shutdown and non-release, vs. tweaking the numbers.
If not, I think we may get leaks to the media . . .
Just imagine if inflation clocked in at 3% and Joe Biden lied that inflation was zero. The double standard in the media is a big part of the destruction of our country.
Are the BLS inflation numbers reliable? Prices seem very high and getting higher, like the water in the frog pot. Could Trump have had his corrupt focus on the agency ever since he threw a tantrum and fired the Director a few months ago? I know his pick for a replacement from the Heritage Foundation withdrew, but there's been no news since. Whenever Trump goes this quiet, I worry. He's like the 18-month old who's suddenly very focused on his diaper.
Nerd question for you, Jared: The CPI is reported to six significant digits (e.g., 324.368 last month), but I always see the monthly increase in the headline number reported to only one (i.e., "0.3%" instead of "0.31%," or even "0.310%"). Why is that? Is the uncertainty in the BLS number really so great that we can only know the monthly change to ±0.1%?
I'm not sure of the answer other than tradition: GDP growth, unemp rate, CPI and PCE inflation, many others, have always been reported to one decimal place. One reason that makes sense to me is that if you go to two, then why not three, etc.
It's don't think it's uncertainty, but to go very far beyond tenths or hundredths would imply a level of precision that goes beyond the data.
Jared Bernstein's point at the end - about how the Fed vs. how the consumer view price level changes vs. price inflation - is an excellent one.
Why would an inflation rate meaningfully above target (and not slowing) with a somewhat weak labor market (although unemployment seems under control) lead to a near certain rate cut (futures indicate a 97% chance), especially when the Fed has a reputation for either doing nothing when risks are in conflict or favoring inflation control?
Mostly no. If inflation were well above target and not slowing, then unless there was something clearly temporary driving up inflation, the Fed would be quite unlikely to cut, even if the job market were soft (ie, stagflation). What's happening now is that they think inflation, but for the tariffs, is gradually heading back down to their target, so most of them are comfortable cutting. But if they thought inflation was sticky NOT because of the tariffs, but because of something more lasting (eg, people expecting higher inflation) they'd be less likely to cut.
Can you explain how “increase price level” (re: Paulson’s comment) and “price inflation” are different?
The idea, as Jared posted, is that consumers pay more attention to the price levels rather than price changes (i.e., inflation rate) when making purchases. I think the Consumer Sentiment is really important.
An increased price level is when eggs cost twice as much today as they did a year or two ago - and that price isn't going up or down, it's just the new normal. Price inflation is when the eggs cost more this week than last week, and last week they were higher than the week before, etc. - a new higher price every week.
Carol Ann and GSF,
I’ll try to clarify my question: it seems to me that an “increased price level” and “price inflation” are the same thing. Possibly the intended difference is between actual price changes and the rate of that increase. Certainly consumers don’t care about the rate of increase but they do care about the higher prices.
I was trying to make the point that “increased price level” and “price inflation” are both higher prices. The inflation can be prices and/or the rate of increase.
Thanks to both of you for your replies.
They're related but not the same. The level is what things cost. Coffee costs about $9 right now, according to BLS. That's its price level. But it's up 19%(!) over the past year. That's its inflation rate.
Your point is well taken in that inflation raises the price level and high inflation raises it a lot! BUT, my key point is that when people are unhappy about the price level, telling them "but inflation has slowed a great deal!" doesn't assuage them at all. It's just telling them that the price level that they're already annoyed about is going up more slowly than it was before. But they want their old prices back!
(BTW, for that to happen broadly, you'd need a pretty deep recession!)
Thanks to Carol Ann and GSF for helping to clarify.
TACO, with T “chickening out” and Putin and the Chinese bravado who knows? The stability of the economy in the face of worldwide uncertainty is surprising… are the “magnificent seven” holding up the market?
How would T react to a market dive? Should I buy gold? Or stock in White House renovation companies?
Good news! Voters are losing faith in Trump's economy.
https://kathleenweber.substack.com/cp/177009883