How bad is inflation? It depends.
Jun 30, 2022
Episode 704

How bad is inflation? It depends.

We'll dive into the dilemma over different measures of inflation.

Depending on which inflation numbers you look at, you either believe inflation is bad or really, really bad. So which is it? We’ll discuss the difference between the consumer price index and the personal consumption expenditures index, and why it matters. Plus, the Supreme Court delivers a major blow to environmental regulation. And, we get even smarter about the Mason jar-NASA connection.

Here’s everything we talked about today:

Join us tomorrow for Economics on Tap. We’ll be on the YouTube livestream starting at 6:30 p.m. Eastern time/3:30 p.m. Pacific time. We’ll have more news, drinks and a game!

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Make Me Smart June 30, 2022 transcript


Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.


Kimberly Adams: Okay Charlton.


Kai Ryssdal: Oh, fine, freakin way to kill all the joy in this podcast, Charlton Thorp. Thanks for being so collegial. Good grief. By the clock, by the clock. That’s my name, Charlton Thorp. Hi everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, where we make the day make sense.


Kimberly Adams: And I am Kimberly Adams, thank you for joining us. It’s Thursday, we’re gonna talk about some news stories and share some make me smiles and then let you go off and do your thing. So with that, let’s get to the news. Mr. Ryssdal.


Kai Ryssdal: I will go first I guess, just because I’m the first in the rundown. And I try real hard not to duplicate content between Marketplace radio program and Make Me Smart the podcast, but I think today, it’s kind of germane. Sabri did this story for us on the air today, and unbeknownst to me actually, Neil Irwin at Axios wrote it up last night. And that is the difference in what the Fed looks at to judge inflation and what people look at to judge inflation, right? The Federal Reserve, as lots of Marketplace listeners will know, like something called PCE, personal consumption expenditure. Consumers most of the time look at something called the consumer price index, CPI. The consumer price index for the most recent reading was 8.6% increase year on year in prices at the consumer level. The Federal Reserve for PCE which came out this morning is – and sorry, I gotta Google this, because Charlton caught me unawares, if you can believe that – PCE this morning came in at – where are we hang on, hang on, hang on, hang on, hang on, hang on standby – 6.3%. So 8.6% on the consumer level, and 6.3% at the Federal Reserve measurement. And here’s why that matters. It matters because what people think is going to happen with inflation matters for what inflation does, that is to say inflation expectations. And I think we’ve touched on this before, but the bottom line is, if people think inflation is going to go higher, they believe and will change their behavior accordingly. They will buy things today instead of waiting for tomorrow. And then that fuels inflation, and it just gets worse and worse and worse. And so it matters if the Federal Reserve’s reading is different than the consumer reading. And I just want to point that out. Neil’s piece is really good, Sabri’s piece is really good today. Sabri says do you want to believe the scary number PCE or the really scary number CPI? And so that’s it. We’ll put those, we’ll put Neil’s piece on the show page, we’ll put Sabri’s pieces on the Show page. And all y’all just need to understand what the Fed is measuring, I guess, is my point.


Kimberly Adams: I guess I just wonder how much people in general pay attention to these numbers. Like, I get that people recognize that stuff is getting more expensive, but I don’t recall ever having a casual conversation with anyone about CPI or PCE outside of Marketplace. So who’s out there throwing it around? “Did you see those CPI numbers? Oh, man, it’s just as bad as we thought.”


Kai Ryssdal: So I think that’s fair. I think, yeah, I think the day it comes out, sorry, I think the day it comes out, people can tell you exactly what it is. Three days later, two days later, probably not. And that’s a fair point. For sure.


Kimberly Adams: Yeah. And so I wonder who like. Is this one of these things where we’re just talking about ourselves? And because we’re talking about it in this way, it’s sort of filtering out through media in general and society in general? Are we the self-fulfilling prophecy here?


Kai Ryssdal: I don’t know. That’s a good question. I don’t know. Let me think about how we can figure that out. Because, you know, whether on Marketplace or on this podcast. That’s a really good question. Can you talk yourself into a recession? Are we the self-fulfilling prophecy? I don’t know the answer to that. It’s a really good question.


Kimberly Adams: Yeah. I’d be very curious to hear like, I guess the people who listen to this podcast are not necessarily representative sample, but does anybody just sort of casually talk about CPI or PCE in conversation? Or is it just that, “Man, stuff’s getting more expensive, inflation – oh my gosh, I can’t believe I’m about to say it – writ large. I hate that phrase. Washington phrase and I hate it so much. Speaking of Washington. Supreme Court, wow, what a session. What a session. I was just thinking, you know, for everything you want to say about Donald Trump, he delivered for his supporters when it came to the Supreme Court, on abortion, on environmental change, on gun rights. I mean, everything. Everything. And the peg for this being that today, the Court issued its last opinions of the session, including a ruling that basically said the EPA, the Environmental Protection Agency, does not have authority to curb, you know, emissions and pollution from power plants. And it’s like, well, what can the EPA do? And in so many ways, this session, the court has really handcuffed the Biden administration and future administration’s moving forward, and really put the onus on Congress to do something different. Because you know, checks and balances. This is how it works. You know, Congress passes a law, the president interprets it, the court says, nope, you’ve gone too far. If you want that power, you gotta go back to Congress and get it. And so, in the abstract, the system is working exactly how it’s supposed to. Now one could argue that these opinions are not necessarily consistent in some cases. But I am just really amazed at how drastically the court has changed the country in the last couple of weeks with these rulings. And we are going to be unpacking this for some time to come. And of course, I cannot mention this without acknowledging that today, the first black woman ever was sworn in as a Supreme Court justice. Ketanji Brown Jackson.


Kai Ryssdal: It was cool to watch, actually. I don’t know if you watched it, it was streamed on the Supreme Court’s website. It was amazingly brief. It was the Chief Justice doing the constitutional oath, and then Stephen Breyer, the retiring justice… is she gonna be Justice Jackson, or Brown Jackson, do we know?


Kimberly Adams: I do not know. I knew this at some point, and now I have forgotten.


Kai Ryssdal: Yeah. Anyway, so Breyer came and gave her the judicial oath. I didn’t know they were two different things. And number two, the judicial oath is really long, as compared to the constitutional oath, which for whatever that’s worth, I don’t know. I don’t know.  It took literally, it took all of three minutes. But let’s back up for a minute. You were amazed at – as am I – the changes that Supreme Court has brought to this country in this term in the last two weeks, really. Are you surprised, though? Because I’m not.


Kimberly Adams: No, I didn’t. But it was interesting. I’m gonna go back and watch it. I’m surprised because I was distracted by other things and not paying as much attention to the court as I probably should have been. And so I was surprised that things like your right to effective counsel in a death row case is questioned, that federal officers in certain cases are allowed to enter your property and beat you up without a warrant. Abortion? No, not surprised. But yeah, I wasn’t… I was looking at, you know. The shiny object was the January 6 hearings and the elections coming up, and I wasn’t paying attention. And so the surprise came, because it was just so many things in rapid succession. And there’s so many things to pay attention to, and I just wasn’t paying attention. That’s why.


Kai Ryssdal: Yeah. There you go. All right, shall we?


Kimberly Adams: Yes. Okay, because of our pre show chat, I’m throwing out the make me smile I have in the rundown. The other day, I was talking about going to the Smithsonian Astronomy Festival over the weekend, and how surprised I was to find that the Ball company makes all of these materials for spacecraft. Satellites and shuttles and all those things. And this is the Ball company from like the mason jars. And someone messaged me on Twitter, Marlon Cox, and he said, I’ve worked in aerospace at NASA for 17 years, and I never knew the Ball Aerospace also made the Ball mason jars. Thanks for making me smart. Yes, but however. I was wrong. I was wrong sort of. So Kai and I got this great email from someone at Ball Aerospace, who said yes, they make all sorts of cool things at Ball Aerospace and they are still owned by Ball Corporation, but they no longer make those jars anymore. So I guess all the Ball mason jars are just like leftover from before or some other company bought them out or something like that. But anyway, now it’s turned its attention to recyclable aluminum. And as a leading packaging company, you’re more likely to find our aluminum cups, cans and bottles at sports and entertainment venues, grocery stores and warehouse clubs, than spot our jars at the local farmer’s market.


Kai Ryssdal: Learn something new every day on this podcast. Is all I’m saying. Every day. Every day. Yeah, that was a good one. That was good call. Good mid game. Good game time switch. Okay, mine is a news of matrimony. James Mattis, the former Secretary of Defense, the former Four-Star Marine Corps General, got married in the last couple of days, I think this past weekend. But here’s why I bring it up. Felicitations to him and all of that jazz. Here’s why I bring it up. So the picture that has been circulating of General Mattis, Secretary Mattis, of himself and his bride, also includes an Elvis impersonator. And we’re gonna put that page on our show page because it’s absolutely crazy. But look, here’s the thing about Jim Mattis. Jim Mattis was known as the monk warrior, right? He’s a four-star combat-proven Marine Corps General. He says things like, and this is a literal quote of what he said to his troops in Iraq, he said, be polite, be professional, but have a plan to kill everybody you meet. Mattis is a no-nonsense guy. And here’s this absolutely lovely and charming picture of him and his wife, and an Elvis impersonator in Las Vegas. So there you go.


Kimberly Adams: We contain multitudes.


Kai Ryssdal: Yes, we do. Yes, we do. And I just thought that was fat. So there you go.


Kimberly Adams: This is a great photo.


Kai Ryssdal: Isn’t it great? Right. Exactly. Exactly. So there we go. Boom. Done. Set the smile on the listener input. All that good stuff. Yes. All right. We are done for today. Kimberly is in tomorrow with Andy Euler. I’m taking the day off. It’s Economics On Tap, YouTube live stream, Discord, all that good stuff. Yes. And thank you for doing my actual day job too. By the way, you’re in for me on radio.


Kimberly Adams: Yeah, we’re gonna help each other out. We all need breaks.


Kai Ryssdal: That’s right. That’s right. YouTube and all that jazz starts at 6:30 out here, 3:30 back East. News, game, drinks, all that good stuff.


Kimberly Adams: Yeah, I wonder what Andy’s gonna drink. Because like, I wonder if he will actively not have a beer because you always have a beer? But who knows? Okay. Anyway, please keep sending us your thoughts and or questions. Our email is Or you can leave us a message at 508-U-B-SMART.


Kai Ryssdal: Make Me Smart is produced by Marissa Cabrera. Olivia Zhao is our intern. Today’s episode was engineered – of course it was – by Charlton Thorp.


Kimberly Adams: Bridgett Bodnar is the Senior Producer and the Director of On Demand is Donna Tam. I hope you do something fun this weekend.


Kai Ryssdal: I’m turning off my phone, take me a couple of books, we’re going away with friends of ours. It’s gonna be nice.

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The team

Marissa Cabrera Senior Producer
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