Greg Ip
speaker
528 appearances
8 recordings
1 series
first heard Jan 2018
last heard Sep 2024
Greg Ip’s voice in public audio — every appearance, attributed to the second.
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Appearances
If you ask people what bothers them most about the economy right now, indeed, what bothers them most, period, they'll often say it's inflation.
And it's really not a surprise why.
Inflation reached a peak of 9% a few years ago, and it's come down from that, but it's still high.
And even though the rate of increase in prices has slowed, prices are still dramatically higher by around 20% than when Biden took office in early 2021.
And people still feel it.
They go to the grocery store, they go to the restaurant, prices are much, much higher than they remember them being for a very long time.
Well, you have to go all the way back to 2020 and 2021 to ask what caused inflation to go up so much in the first place.
And it was really like the old story goes, supply and demand.
So we had a situation where supply was really constrained by the unusual patterns of demand that followed the pandemic.
Plus, millions of people left the labor force because they retired or they were worried about the virus.
And so there were labor shortages everywhere.
So you take a situation where a lot of companies have a limited ability to supply goods and services, and then you pour on all this demand from federal stimulus and low interest rates and pent up saving from people who weren't spending while they were locked down.
And it was that collision of supply and demand that created the very high inflation rates.
And then in 2022, Russia invaded Ukraine, and that basically had knock-on effects on the prices of oil and
and natural gas all around the world.
Why did the inflation rate subsequently come down?
It's because a lot of the supply chains with time managed to work themselves out.
So for example, there was a shortage of semiconductors, which was making it difficult to make cars.
That shortage is now over.
And as a result, automobile sales and automobile production is up and the prices are coming down.
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