Are We Getting Relief From Inflation?

The Producer Price Index (PPI) is a key indicator of inflation, and the latest numbers show a decline of 0.3%

PPI decline driven by lower energy prices, but core goods and intermediate goods prices still rising.
Businesses absorbing input costs instead of passing them to consumers, a 'tariff story'.
Banks like JPMorgan Chase see huge profits, while IBM disappoints, shedding $69B in market value.

Dollar burns, bear awakens — Source: anand purohit / Getty

Are We Getting Relief From Inflation?

Is the US economy finally showing signs of relief from the inflationary pressures that have been weighing on consumers and businesses alike? Economist Dr. Matt Will joined Tony Katz to break down the latest numbers and offer his insights on what they mean for the future.

According to Dr. Will, the Producer Price Index (PPI) is a key indicator of inflation, and the latest numbers show a decline of 0.3% – a welcome respite from the rising costs that have been plaguing businesses and consumers. “The headline PPI fall,” Dr. Will said, “is good, but it’s almost entirely an energy reversal story.” He explained that the drop in energy prices, particularly gasoline, has been the main driver of the decline.

However, Dr. Will cautioned that the story isn’t entirely rosy. While the core goods sector, excluding food and energy, rose by 0.2%, the processing of intermediate goods – the stuff that goes into the report – saw a significant increase of 0.6%. This, Dr. Will noted, is a sign that businesses are still absorbing input costs and not passing them on to consumers. “Business manufacturers are still absorbing input costs and they’re not passing them through,” he said. “It’s still a tariff story, and that the manufacturers are not passing along to the wholesaler.”

The conversation turned to the impact of tariffs on the economy, with Dr. Will explaining that they create inefficiencies in the global economy by changing consumer behavior. “When you have a tariff, then you’re going to change your behavior,” he said. “You’re gonna buy less of something that is taxed, you’re gonna buy more of something that’s not taxed.” He also pointed out the absurdity of the government trying to control prices and create inefficiencies.

The discussion also touched on the banking sector, which is experiencing huge profits. Dr. Will noted that JP Morgan Chase and Bank of America have seen significant increases in earnings per share, with JP Morgan Chase’s earnings per share reaching $6.14. However, he also pointed out that IBM’s earnings were a major disappointment, with the company missing expectations and losing $69 billion in market value in one day.

As the conversation wrapped up, Dr. Will offered his thoughts on the future of the economy and the impact of the ongoing tensions with Iran. “The market has seemed undeterred by the latest couple days of ramp up,” he said. “Is there something that makes them question what comes next? Where they start a pullback?” He noted that the market’s upward trajectory remains unchanged, despite the tensions, due to the huge profits being made by businesses.

Listen to the “Are We Getting Relief From Inflation?” discussion in full here:

Listen to the show in full here:

Watch the show here: