What we’re reading (5/13): inflation edition
“Jump In Consumer Prices Raises Stakes In Inflation Debate” (New York Times). “Consumer prices jumped at the fastest pace in more than a decade in April, surprising economists and intensifying a debate on Wall Street and in Washington over whether inflation might reach levels that would squeeze households and ultimately undermine the recovery.”
“Another Inflation Gauge Comes In Hot With Producer Prices Jumping 6.2% In April From A Year Ago” (CNBC). “Companies paid much higher prices to producers in April for everything from steel to meat in another sign of inflation in an economy rapidly recovering from the pandemic. The new data comes a day after a sharp gain in consumer prices sent the stock market reeling.”
“Powell Gets His Inflation Wish” (Wall Street Journal). “The benign explanation for the April price surge is that it’s “transitory,” as Mr. Powell likes to say. The April surge compares to a price decline last spring at the height of the pandemic lockdowns, and the comparisons will look less ugly in coming months…[y]et inflation is always and everywhere a monetary phenomenon, as Milton Friedman put it. For more than a year the Fed has been pursuing an expansionary policy for the ages. It has been keeping rates near zero and expanding its balance sheet to record levels with bond purchases in an economy that has been growing fast for more than nine months.”
“The Inflation Trilemma” (Marginal Revolution). “You all know by now that the measured rate of price inflation came in at 4.2%, much higher than expected. Many people wish to maintain this is not a major problem, and maybe they are right. But here are three views you cannot hold simultaneously: 1. The distribution of income really matters. 2. Workers don’t have nearly enough bargaining power, and are at a disadvantage in negotiations and renegotiations. 3. Higher rates of price inflation are not a problem. Higher rates of price inflation, of course, lower real wages unless workers can bargain back up the nominal wage to reattain their previous real wage.”
“McDonald's Raises Minimum Pay At Corporate-Owned Stores Across The US, As The Battle For Workers Heats Up” (Business Insider). “McDonald's is raising its minimum wage in corporate-owned stores, as fast-food chains struggle to hire employees. On Thursday, the fast-food giant announced it is rolling out pay increases at corporate-owned locations, which will shift entry level pay for crew to at least $11 to $17 per hour. The starting range for shift manager will be at least $15 to $20 per hour, based on restaurant location.”
