Edward Conard

Top Ten New York Times Bestselling Author

  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
Upside of Inequality Oxford Unintended Consequences

AI Summary. Consumer price inflation slowed only modestly over the past year, a deceleration attributable to slower rental inflation based on signed leases that are checked once every six months. Measures stripping out housing and volatile components indicate underlying inflation has been running around 2.5%-3% annually since the end of 2022.

Matt Klein The Overshoot
Date Posted:

.@M_C_Klein argues that the CPI increase of 0.1% between April and July overstates the extent of the disinflation, and that “CPI inflation is still running around 2.5%-3% a year, just as it has been since the end of 2022.”

Has underlying inflation actually slowed over the past year?

Core argument: CPI inflation slowed only modestly, from 3.1% over the 12 months to June 2023 to 2.9% over the 12 months to July 2024, a deceleration attributed entirely to slower rental inflation based on signed leases, which are checked once every six months.

The 12-month change in the CPI from June 2022 to June 2023 was 3.1%, while the 12-month change from July 2023 to July 2024 was 2.9%. That modest slowdown is entirely attributable to the substantial deceleration in rental inflation based on signed leases—which are checked only once every six months. Measures based on listed rents for available units had long implied that this measure of inflation would eventually slow, and it has. Higher-frequency cuts of the CPI that strip out housing and other volatile or idiosyncratic components tell a similar story: underlying CPI inflation is still running around 2.5%-3% a year, just as it has been since the end of 2022. I do not know what would be gained by squeezing the last percentage point or so of inflation out of the economy, especially if that came at the cost of impoverishing consumers and reducing business investment.

Takeaways by Macro Roundup® AI

  1. CPI inflation slowed only modestly, from 3.1% over the 12 months to June 2023 to 2.9% over the 12 months to July 2024, a deceleration attributed entirely to slower rental inflation based on signed leases, which are checked once every six months.
  2. Higher-frequency CPI measures that strip out housing and other volatile or idiosyncratic components show underlying inflation running around 2.5%–3% a year, as it has since the end of 2022.
  3. Squeezing the last percentage point of inflation out of the economy offers unclear gains if the cost is impoverishing consumers and reducing business investment.

Related Articles:

  • Markets Think Inflation Will Be Too High For The Next 20 Years — Inflation expectations derived from the gap between regular Treasury yields and inflation-indexed Treasury yields show expected annual inflation over the next 10 and 20 years running considerably above expected inflation for the decade beginning 20 years out. Before the pandemic-era inflation surge, actual inflation and expected future inflation tracked each other closely.
  • The Fed Should Not Cut Interest Rates Yet — Labor demand continues to outpace labor supply, with job openings 17% above pre-pandemic levels and average wages up 3.9% year on year. The author argues current conditions do not warrant interest rate cuts, as the risk of inflation getting stuck above 2.5% is too great.
  • Strong, But Not Too Hot: The U.S. Economy as of Mid-2024 — Nominal spending by U.S. consumers and businesses continues rising at roughly 5.5% a year, a pace that makes it difficult for inflation to settle at the Federal Reserve's 2% goal unless real output grows about 3.5% annually. Output is growing about 2.5%-3% while inflation has slowed toward 2.5%-3%, an improvement the author attributes to faster productivity and easing supply disruptions.
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