Gabe Rubin

speaker

468 appearances 13 recordings 1 series first heard Apr 2018 last heard Oct 2023

Gabe Rubin’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Hidden Inflation: How Companies Charge More Without Raising Prices · 11 Feb 2022 podcast

And most of the research shows that people looked at them back in the 70s when it was a novel thing. voice-verified

But unless you're a very, very price-conscious consumer, voice-verified

you probably aren't checking the unit price of every item you're buying at the grocery store. voice-verified

Yeah, the government is actually really good at tracking shrinkflation because of unit pricing and the ability to know how much something costs per ounce, for example. voice-verified

But they're less good at noticing quality declines. voice-verified

It's very hard for a government analyst to voice-verified

to factor in what the value of having your hotel room cleaned every day is. voice-verified

So that is something that's really hard to gauge, and it doesn't really show up in government inflation figures, according to an economist that I spoke to at the Bureau of Labor Statistics, which tracks those numbers. voice-verified

In terms of scrutiny from the government, there is an effort afoot by the Biden administration to look at some of these so-called junk fees, which is what they're calling them, these hidden fees. voice-verified

And the Consumer Financial Protection Bureau is looking specifically at fees in the financial services sector, so bank overdraft fees and things like that. voice-verified

And the Department of Transportation is looking at things like baggage fees imposed by airlines. voice-verified

And there's definitely a feeling within the Biden administration that these junk fees hurt competition by not providing price transparency. voice-verified

So consumers can't make informed choices about how much things cost if they can't see what the ultimate price is going to be. voice-verified

So they view this in terms of competition. voice-verified

And I think we can expect that there will be further actions by the Biden administration in this space in the coming years. voice-verified

Consumers are pretty annoyed at shrinkflation, and they're certainly stressed out about inflation in general. voice-verified

Consumers notice when their dollar isn't going as far as it used to, and it shows up in consumer sentiment surveys that show that people are very pessimistic about the current state of the economy. voice-verified

And with inflation, inflation expectations ultimately drive future inflation. voice-verified

So if you expect something to cost more in the future, you're going to be willing probably to buy it at a higher price because you don't expect the price to ever go down. voice-verified

So the risk in this area is that people will continue to expect higher prices and companies will continue to charge them and we'll have an inflationary cycle that continues. voice-verified

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