Biden takes a wrong step

I was sorry to see President Biden threaten steel tariffs on antidumping grounds. For my views on this topic, see this old piece I wrote with Phill Swagel, who is now CBO director.

It's all about shelter

 
Click on image to enlarge.

This figure shows that the PPI for final demand tracks the CPI less shelter very closely. By both measures, inflation is now very much under control. The problem is that the CPI for shelter is up 5.6 percent, so the overall CPI looks quite hot.

Some would argue that leaving out shelter is misleading because shelter is such a large fraction of the typical household budget. On the other hand, the CPI for shelter is well known to be a lagging indicator of rents by virtue of how it is constructed, and other more current series show no recent inflation in rents. This latter argument puts me in the optimistic camp on inflation.

By the way, I recently made a bet with my friend Larry Ball that the overall CPI from February 2024 to February 2025 will rise by less than 2.5 percent. I am writing the bet here as a sort of contract. We will check back next year.

The bet is for $5. That is in nominal terms. So, in real terms, I get more if I win than Larry gets if he wins.

A Romantic Comedy for the Pigou Club

My friend Yoram Bauman, the stand-up economist (who I first met because of his parody of my ten principles), says he’s working on a play... and that it’s a romantic comedy about carbon tax ballot measures! Details on his Kickstarterpage and his blog.