Chapter 1: What does the latest CPI reveal about inflation trends?
Oh, look, inflation from American public media. This is Marketplace. In Los Angeles, I'm Kyle Risdell. It is Tuesday. Today, this one is the 12th of May. Good as it always is to have you along, everybody. We're going to do a little economic forest for the trees thing as a way to get going today. The April Consumer Price Index came out this morning, as you have surely heard.
Inflation is running 3.8 percent year on year, six tenths percent month on month. That is the headline number.
Chapter 2: How do economists define transitory inflation?
It is not great. And more to the point, it is headed directly away from where the Fed wants it to be, which is anyone, anyone, Bueller, anyone? 2%, as you know. A brief central bank aside here while I'm at it, Kevin Warsh was confirmed by the Senate today to a 14-year term on the Fed's Board of Governors. A vote on him to replace Jay Powell as chair is expected tomorrow.
Powell, as you also know, because you heard it here, can stay on the board if he likes until January of 2028. All right, so back to inflation. Yes, this spike does bring rising prices right back front and center. But as Marketplace's Kristen Schwab explains, let us not lose sight of the fact that inflation has been a thing in this economy for years now.
There's a term economists use to describe a singular and short-lived shock to prices.
Chapter 3: What are the implications of the war with Iran on inflation?
Maybe one you've heard before. One that Sean Snaith, who directs the Institute for Economic Forecasting at the University of Central Florida, would use to describe the war with Iran.
That is potentially as close to transitory as you can get.
He says the spike we're seeing in energy prices is, in theory, just a blip because the war could be resolved tomorrow. But also, maybe not.
If this continues through the summer and into the fall, then we start to see more downstream effects of higher oil and natural gas prices.
At some point, businesses will have to charge more. Gary Schlossberg, global strategist at Wells Fargo Investment Institute, says that will make inflation harder to tame.
Even if and when the trade routes are reopened, when supply chains normalize, inflation will come down, but it could be more gradual than it might have been a few years ago.
More gradual than it might have been a few years ago because the war comes after a bunch of other economic shocks. There have been tariffs, which some economists say caused transitory inflation. There was the pandemic, which the Fed famously said caused transitory inflation. How many consecutive transitory inflation events got to happen before it becomes one big pot of persistent inflation soup?
I think that's also a million-dollar question that macroeconomists would like to be able to answer. Julie Smith, an economist at Lafayette College, says Americans have lived through a five-year period of big increases to the cost of necessities—housing, food, gas— They feel it. They've come to expect it.
I don't know if that just goes away if, you know, gas comes down.
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Chapter 4: How are small business owners reacting to rising costs?
I'm Kristen Schwab for Marketplace.
I'm old enough to remember when the Fed couldn't get inflation up to 2%. Remember that? Wall Street today, traders were not exactly wild about all that inflation data. We will have the details when we do the numbers.
President Trump is on his way to Beijing for talks with Chinese President Xi Jinping about, among many other things, the bilateral trade relationship, an oft-forgotten part of which is agriculture. So we got April Hemes on the phone this morning. She grows corn and soybeans in Iowa. Hi, I was just talking about you with a friend of mine. All good, I hope. It was.
I said, I went to Des Moines and saw you. She goes, oh, if he ever comes back, I love listening to him. I said, well, you know, we're kind of friends. I think we're friends. I think we're friends. First of all, the standard question, how are things? You got the seeds in the ground. You got the crop in the ground, right? I got the crop in the ground.
Chapter 5: What challenges do recent graduates face in the job market?
We had the fourth wettest April on record, and now we're the sixth driest May on record. So welcome to Iowa. What does that mean for a non-farm person? That can't be good. For a non-farm, it means I got a good start, I have good soil moisture, and now we're praying for a rain. Farmers are never happy. Well, that's true.
Look, we're checking back in relatively soon after the last time we talked to you, which we looked it up was the 20th of February, which becomes relevant in a minute. And we're calling you back because I want to talk about two things. I want to talk about China and the president's trip. And I want to talk about the farm economy.
And it seems to me you're the person who can do both of those things for us.
So, yes, last expectations. Yes.
Well, the last couple of times we've talked and this is going back, you know, in way back into Trump won. You were not hopeful about about the the Chinese interest in American agricultural products being restored. And I guess I wonder where you are on the eve of the president going over there. Well, number one, I hope it's more than window dressing.
I hope it's more than just, well, let's meet up and make this look good. As far as soybeans, no, we're not looking for anything more than what they promised last fall.
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Chapter 6: How is AI influencing education and job prospects?
And mostly because they can get their soybeans from Brazil, who just finished their harvest, for much cheaper than they can buy ours. So what... What we're really looking for is all the other commodities now are going, what about corn or let's do wheat and things like that. So that's really what we're hopeful for more than soy, which is really kind of new. Yeah, yeah, yeah, yeah. No, totally.
And we talked about that. You're hoping for it. Do you need it? You know what I mean? Yeah. With everything that's happened to us, our markets through tariffs and everything, the more exports we can get, the better. We need our prices to come up because our inputs have become so much more. Well, I'm glad you went there. It's almost like you have my notes on this conversation.
I sure am.
Let's talk about those inputs, right? Fertilizer and all of those things, right? We checked back with you. I had some folks call you and check back in and make sure you had gotten your fertilizer pre-bought and all that jazz.
Chapter 7: What role does hydropower play in the Northeast U.S. economy?
What about next year, though? You know? I did. You know what? That is the huge question now that all of us are asking. Last year, it went up 30%. Now they're saying another 30%. Fertilizer is the huge question. Seeds, everything, and fuel. That has, as we all know, has taken quite a hike. What are you paying for a gallon of diesel now?
And how many, that big thing that I drove, whether it was, I don't know if it was a combine or a tractor, whatever it was. Yeah, that big thing you drove is. That big thing I drove. That big thing, that combine. And I was very proud of you. You didn't run over any of my corn. Well, it was all automated, April. I mean, come on. I could barely, I could not have ruined that.
Chapter 8: How might Quebec's energy exports change in the future?
I could not have ruined that. What are you paying for a gallon of diesel? And how many gallons does that combine need to do whatever you do on a day? It needs a lot. I think it has almost a 300-gallon tank. Oh, man. Yeah. And, well, it's a big engine.
Yeah, yeah, for sure.
It pulls a lot of horsepower. But then, you know what? I wish I knew how much per hour. Nationally, diesel's like 610, 620-something? Yeah, it's around five here for the road. We get the road tax taken off for farm equipment.
All right.
But that is going to be huge. And that's what I'm hearing more than anything, the fertilizer and the fuel. And I wish I knew the answer to all of this. Yeah, no, I bet. But look, on a more serious note, do you know people who have said, I can't make this work anymore. I got to do something else.
I know a couple who are my age, retirement age, who had just said, I'm not going to plow through my savings, you know. Now, there's probably more that are going to hang on too long. And, you know, I talked to my banker and he said, I got guys selling farmland to pay for the equipment they bought a few years ago when it was good.
You know, that's where when you start selling your assets to pay for other assets, that's not good. Right. No farmer wants to rely on the government and the government payments, and here we are. We need to all sit down and have meaningful talks on how to get through this, not the window dressing, not the promises. Boy, I went there, didn't I? No, look, that's why we call you.
I mean, I can always bank on you telling me the way it is. April Hemmes, corn, soybeans, and some wisdom there in Iowa. April, thanks a lot.
You bet.
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