Inflation Is Still A Problem
- Inflation is still a problem, with market-based core inflation at 0.3%, the highest in 12 months.
- Government spending is the main driver of inflation, with concerns around fraud and lack of transparency.
- AI is disrupting industries, but this creative destruction is necessary for economic growth and employment.
Inflation Is Still A Problem
As the economy continues to navigate the challenges of inflation, tariffs, and war, it’s hard not to wonder what the future holds. In this episode of the podcast, Tony Katz is joined by Dr. Matt Will, an economist at the University of Indianapolis, to break down the latest inflation numbers and what they mean for the economy.
According to Dr. Will, “inflation is still a problem, and the real drags on the economy are the war, tariffs, and government-driven inflationary pressures.” However, he notes that the headline inflation number, which came in at 0.4%, is not the whole story. “If you look under the hood, the core number for the month was 0.2%, which is not bad. But the market-based core, which is what households are paying, was 0.3%, which is still a hot number.”
Dr. Will emphasizes that the market-based core is what matters, as it’s the number that the Federal Reserve actually looks at. He explains that this number is “the highest it’s been in the last twelve months, and it’s what’s causing the inflation.” He attributes the inflation to government spending, which he believes is the main driver of the problem.
Tony Katz presses Dr. Will on the issue of government spending, pointing out that the deficit is projected to be one of the highest in history, with some of it going towards military spending. Dr. Will agrees that military spending is necessary, but notes that there’s still a lot of “fraud going on” in government spending. He references estimates from JD Vance about the extent of the problem and a new law in California that bans the disclosure of government fraud.
The conversation also touches on the topic of artificial intelligence (AI) and its impact on the economy. Dr. Will notes that AI is not just about data centers, but is being used across the board in various industries. He cites the example of an insurance company that uses AI to adjust claims, and a course deployment system that he designed using AI, which can be completed in a weekend.
Tony Katz raises concerns about the potential job losses due to AI, but Dr. Will argues that this is a natural process of “creative destruction,” where new technologies replace old ones. He references Joseph Schumpeter’s concept of creative destruction, where industries like the horse and buggy were replaced by the car industry. Dr. Will believes that this process is necessary for economic growth and employment.
As the conversation comes to a close, Tony Katz thanks Dr. Will for his insights and encourages listeners to tune in for more discussions on the economy and its challenges.
Listen to the full episode to hear more about the state of the economy, the impact of government spending, and the role of AI in shaping the future of work.
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