🇺🇸 Wait, Was Inflation Actually Transitory?

Good morning, and happy Monday. In what is now known as Juneteenth, on this day in 1865, Union soldiers arrive in Galveston, Texas with news that the Civil War is over and slavery in the United States is abolished. The history is worth a read, click here to check it out.

Plus, she turned her neighbor's barn into an Airbnb. Now she generates nearly $3M a year from rentals she doesn’t own.

Also, you’ve obviously heard of “robots”, but have you ever heard the term “cobots”? We hadn’t either, but they’re pretty darn interesting.

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ECONOMY

Was Inflation Actually Transitory?

Inflation continues to be a major focus for economic policymakers and analysts, with data showing that May’s price growth slowed to its lowest annual rate in two years. This follows a period of historic inflation amid the COVID-19 pandemic and government efforts to respond — including significant stimulus spending and supply chain issues.

Reporting from The Right: Inflation cools sharply in May to 4%, lowest in 2 years Megan Henney, Fox Business

Reporting from The Left: Another key inflation gauge fell sharply in May Alicia Wallace, CNN

From The Flag: The Federal Reserve has been aggressively responding to inflation for a year, and raised rates for 10 straight policy meetings. But the central bank paused its rate hike campaign last week. Here’s more from both sides.

RIGHT-LEANING SENTIMENT

The White House Spikes the Football, But We’re Not Out of the Woods Yet

• President Biden touts an “economic recovery” while running for reelection, but voters still see rising prices.

• The White House bragged about May’s inflation print, but the reaction on social media shows people aren’t buying Biden’s argument.

• Similar to 2008, the real estate market points to economic trouble, as even if rates stop rising, the commercial sector is crumbling.

Inflation Is Biden's Election Headwind William Galston, Wall Street Journal Opinion: "President Biden... (has) cited numerous signs of progress since he took office—rapid job creation, record low unemployment coupled with increased participation in the labor force, significant gains for African-Americans, Hispanics and women; and the strongest post-pandemic recovery of any major economy. Inflation is falling and is lower than in Europe and the U.K. Factors such as unsnarled supply chains, an impending slowdown in rent increases, and a likely decline in corporate profit margins suggest that inflation will continue to subside. These claims are factually correct, and they outline a conundrum: If the labor market is so strong and the overall situation is improving, why are voters so discontented about the economy and giving Mr. Biden such low marks for his economic management? ... (Because) for most voters, the negative effects of inflation outweigh all the economic improvements Mr. Biden noted... only 35% of the electorate approves of the way the president is handling this problem."

White House Brags About Chart Showing Inflation Skyrocketed After Biden Took Office Zach Jewell, Daily Wire: "The White House was dragged (last week) for tweeting a chart that showed inflation is lower than it was last summer — even though the chart also showed that inflation had skyrocketed after President Joe Biden was sworn in. In the post, the White House celebrated inflation reaching 4%, the lowest rate since March 2021, claiming the lower rate 'is giving families real breathing room.' The chart may have not been the clear victory sign the Biden administration was going for, though, as it showed the massive increase in inflation from January 2021 to May 2022 when it reached 9% under the current president’s watch. ... The slight inflation rate decrease in May came as a result of lower gas prices and increases in grocery prices and other items, POLITICO reported. ... 'core' prices, which the Fed mainly focuses on, rose for the sixth straight month in May."

One more opinion piece from the Right: It's Starting To Look Like 2008 All Over Again Philip Pilkington, Newsweek

LEFT-LEANING SENTIMENT

Inflation Has Slowed, Without Major Unemployment — For Now

• Vaunted economist Larry Summers incorrectly argued inflation couldn’t be brought down unless unemployment rose significantly.

• There’s plenty of healthy debate among economists as to what comes next, but the “easy part” may be over.

• Inflation continues in services, food, and beverages, but gas prices have gotten much cheaper.

Larry Summers Was Wrong About Inflation Eric Levitz, New York Magazine: "In February 2021, the celebrated economist warned that Joe Biden’s $1.9 trillion American Rescue Plan was excessively large and that a sustained period of high inflation would follow in its wake. ... Then consumer prices shot up to four-decade highs. Summers’s (already vaunted) stature within the business press rose. ... The Biden administration started seeking his counsel. ... In the Harvard professor’s estimation, US policymakers had no choice but to deliberately throw millions of Americans out of work or else accept a steadily deepening inflationary crisis. It is now clear that Summers was wrong. ... In reality, both wage and price growth have been slowing for months, even as unemployment has remained near historic lows. Summers’ failure to anticipate this outcome should lead us to reconsider just how prescient his analysis of the post-COVID economy ever was."

Wonking Out: How Low Must Inflation Go? Paul Krugman, New York Times Opinion: "Inflation has come down substantially. Gas prices are way down from their peak of $5 a gallon. As a recent White House report points out, grocery prices, which soared last year, are currently falling, and may well fall further in the months ahead. And all of this has happened without a large rise in unemployment. But how far will “immaculate disinflation” go? Will it get us all the way back to the Federal Reserve’s target of 2 percent inflation? Don’t ask economists... unless you’re willing to wade into a highly tendentious debate. ... My own view? I don’t know. But I am worried that we’ve seen the easy part — and that getting inflation down from 3 to 2 might be a lot harder than getting it down from 10 to 3."

One more opinion piece from the Left: Why is inflation cooling — and why isn’t it coming down more Elisabeth Buchwald, CNN

FLAG THIS

Polling Says: 90% Worried About Inflation

Polling released earlier this month shows an increased number of small businesses are worried about inflation and future business conditions (National Federation of Independent Business).

A separate survey found 9 in 10 Americans are “worried about higher prices.”

Nearly as many (88%) say they’re “worried about the future of the country.”

Along party lines, 96% of Republicans agree with that statement. So do 83% of Democrats (Fox News).

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On June 19, 1905, some 450 people attend the opening day of the world’s first nickelodeon, located in Pittsburgh, Pennsylvania, and developed by the showman Harry Davis. The storefront theater boasted 96 seats and charged each patron five cents. Nickelodeons (named for a combination of the admission cost and the Greek word for “theater”) soon spread across the country.

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