While inflation is technically about general price levels, in practice we use it to describe living costs. That’s why the benchmarks measure consumer prices and personal consumption expenditures. These are where higher prices hurt because they apply to everyone. Other measures like the Producer Price Index have valuable information but are less immediately relevant to most people.
Read moreI’ve often thought it would be fun to convene a therapy group of weather forecasters and economic forecasters. Both face the same frustration: Everybody wants a clear, simple answer they can’t possibly give, because they don’t know. Then they get blamed for being wrong anyway.
Read moreBusiness media is famous for propagating buzzwords and phrases, especially if they produce more clicks. The latest is Artificial Intelligence. It’s everywhere and is now a fixture in earnings calls, too. Every CEO is getting asked how AI will fit into or affect their company. It’s not quite as bad as every CEO trying to figure out how to make their company a “dot com” in 1998–1999, but almost.
Read moreEconomic news—and market reactions to it—increasingly resemble a tennis game. Spectators follow the ball back and forth, thinking something will happen but usually it doesn’t.
Read moreRemember when inflation was going to be transitory? Good times. I was in that camp myself early on, as were some serious analysts I greatly respect (and still do). Then the data began to show core inflation would be stickier than expected, and I turned in my Team Transitory T-shirt. I appreciate people who admit their mistakes. We all make them.
Read moreAn old Danish proverb, later attributed to everyone from Mark Twain to Nostradamus to Yogi Berra, says, “Predictions are difficult, especially about the future.” I would refine it a little: Predictions are actually pretty easy. Accurate predictions are very difficult.
Read moreBut mouse-friend, you are not alone
In proving foresight may be vain:
The best-laid schemes of Mice and Men
Go oft awry,
And leave us only grief and pain,
For promised joy!
—Robert Burns, “To a Mouse,” English translation
Read moreIf the inflation numbers leave you scratching your head, join the club. The August data was especially perplexing. The Producer Price Index came in hot, up 8.3% in the last year, inviting 1970s comparisons. Obviously, our current situation is different in many ways. But so were the 1970s, at first.
Read moreRecently I searched the Thoughts from the Frontline archives to see how often I used the word “bubble.” It was more than I thought, and I wasn’t quoting Don Ho. The bubbles I talked about were anything but tiny. Most of them subsequently popped, too.
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