Does measuring inflation matter during a pandemic?
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Every month, the Bureau of Labor Statistics puts out the consumer price index. It’s a number that measures the change in prices consumers are paying for common goods and services. We learned Tuesday it fell by 0.8%, the biggest drop since the Great Recession. But in a pandemic world, what’s the value of measuring inflation when everything seems to be in flux?
The Bureau of Labor Statistics deploys a team of window shoppers every month to check prices of things Americans buy regularly. A loaf of bread, coffee beans and even vodka. And those prices? CPI data show they’ve gone up as we cook more at home because of the pandemic. But then there’s everything else. Take gas, which fell more than 20%.
“This is not surprising given that people aren’t supposed to be out there driving, the airlines aren’t flying, a lot fewer trains are running and so on,” said Kit Baum, a professor of economics at Boston College. Baum said demand for many of the things we buy has gone down, like car insurance and clothing, which are also part of the CPI.
Still, we keep hearing the economy is on pause. So why does any of this even matter?
“There will be lots of different kinds of data that will give us different pictures of the post-COVID economy, but one of them will be how prices adjust,” said Kathryn Dominguez, a professor of economics at the University of Michigan. Once things pick up again, how much prices change will give us an indication of where the economy is headed. And Dominguez said it’s not just about the shift in prices. The BLS also tracks what people buy.
“It is quite possible that the basket of goods that the average American purchases, even after the lockdowns are all over, differ from what they were before the lockdowns,” she said.
The pandemic could continue to impact what we eat, how we get around and what we buy to entertain ourselves or feel comforted. And that will impact the economy just as much as what all those things cost.
COVID-19 Economy FAQs
Are states ready to roll out COVID-19 vaccines?
Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.
How is the service industry dealing with the return of coronavirus restrictions?
Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.
How are hospitals handling the nationwide surge in COVID-19 cases?
As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.
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