How Bad Is Inflation, Really?

This morning, the Labor Department will report how many jobs employers added to their payrolls in February. Economists expect a healthy gain. (For full coverage of the report, see The Times’s special briefing, which will be updated throughout the day.)

Despite strong job numbers, polls show the public thinks the U.S. economy is headed in the wrong direction. The main culprit appears to be inflation, with fears that fast-rising prices will soon make people worse off — even those in jobs where wages are growing, too.

Some of the concerns may be misplaced. High inflation tends to come when both prices and wages are rising. Last month, the White House pointed out, based on data from a trio of top economists, that average incomes, including what people earned at their job and from their investments, have outpaced inflation, with gains for the bottom half of earners rising by more than 10 percent. But people tend to feel the pain of rising prices more than they do gains in their paychecks, which they see less often.

Inflation becomes a problem when prices continue to rise while wages stagnate. That’s what happened in the 1970s, and is threatening to happen again. Inflation has been stoked by supply-chain problems during the pandemic, and now Russia’s invasion of Ukraine may prolong supply-chain issues and push up energy costs. This persistent inflation could start to hit economic growth, an important factor underlying pay packages and investment gains.

  • That said, the Nobel-winning economist Joseph Stiglitz declared yesterday that “we are not facing an inflation crisis.” At a panel discussion hosted by the Center for Economic and Policy Research, a liberal-leaning think tank, he argued that the economy is “not likely to have the type of wage-price inflation that we had in the 1970s.”

Policymakers are mobilizing. “People are unhappy about inflation,” said the economist Jason Furman, a former top adviser to President Barack Obama. “And we should care about that.” President Biden said this week that fighting inflation was his “top priority,” and the Fed chair Jay Powell said he was prepared to raise interest rates for the first time in years later this month. Chris Waller, a Fed governor, said recently that he might support more aggressive rate increases if inflation reports and the February jobs data showed “that the economy is still running exceedingly hot.”

Some economists think the government should be more creative, trying things like paying people not to drive in order to lower the price of gas. Biden also expressed support for some price controls in his State of the Union speech this week. “It is a political problem,” Stiglitz said. “We should try to protect people from the downside of inflation.”

The Sacklers reach a new settlement over opioids. The billionaire family behind Purdue Pharma agreed to pay as much as $6 billion to a group of holdout states to help address the damage from the opioid crisis, in exchange for protection from civil claims. The deal must still be approved by a federal judge, and wouldn’t protect the Sacklers from criminal prosecution.

The Biden administration asks Congress for $22.5 billion in Covid aid. The money would help fund the White House’s new coronavirus response strategy. Meanwhile, the N.F.L. became the first American pro sports league to drop its Covid protocols.

Amazon reportedly pressures the F.T.C. to make a move on its MGM deal. The tech giant recently certified that it had provided all information about the $6.5 billion transaction to the agency, forcing the regulator to decide within weeks whether to challenge the deal, The Wall Street Journal reports.

U.S. banks offer workers in Hong Kong cash to cope with severe pandemic restrictions. JPMorgan Chase is giving workers $230 each to treat their families to a post-lockdown meal, while Goldman Sachs is offering money for entertaining children stuck at home.

Rivian apologizes for retroactively raising prices. The electric vehicle maker said it would honor the original prices for customers who previously ordered a pickup or S.U.V., after increasing prices this week by as much as 20 percent. Rivian said the price hike was meant to cover the rising costs of parts, but it “wrongly decided” to apply the increase to existing preorders.

The effects of the war in Ukraine are being felt by the retail industry, with companies worried about supply chain disruptions, inflation and a decline in consumer sentiment in their home markets. Western retailers have also begun to pull back from Russia, pausing sales to the country, suspending local operations or divesting entirely.

Here’s where things stand:

Ikea said yesterday that it would pause all exports and imports to Russia and Belarus and would halt production and retail operations in Russia, affecting 15,000 of its employees. The retailer moved into Russia a decade after the fall of the Soviet Union, drawn by the country’s emerging middle class. The company will continue to operate Mega, its chain of shopping centers in Russia.

TJX, the owner of T.J. Maxx and Marshalls, said yesterday it would sell its stake in Familia, an off-price retailer with more than 400 stores in Russia. TJX paid $225 million in 2019 for its 25 percent stake and could take a big loss when it is sold.

Nike said yesterday it would temporarily close its 116 stores in Russia. It had already stopped selling online to customers in the country.

Earlier this week, H&M said it would temporarily pause all sales in Russia, where it had 168 stores at the end of last year. Canada Goose said it would cease wholesale and e-commerce sales to Russia.

But some luxury retailers are staying open in Russia. Brands like Bulgari have seen wealthy Russians race to buy high-end goods as a hedge against the depreciation of the ruble. “In the short term it has probably boosted the business,” Bulgari’s C.E.O., Jean-Christophe Babin, told Bloomberg. “We operate in many different countries that have periods of uncertainty and tensions.”

Stacey Abrams is most famous as a champion for voting rights and a rising star in the Democratic Party. Her career as an author of nonfiction, romance novels and a Supreme Court thriller is also well known. Less discussed is her long career in business.

Among other ventures, Abrams co-founded a fintech company. She delves into this aspect of her background in a new book out this month, called “Level Up: Rise Above the Hidden Forces Holding Your Business Back.” Co-written with her business partner, Lara Hodgson, the book recounts lessons they’ve learned in business — some of which have turned out to be relevant to politics, too.

“Being an entrepreneur is central to how I think about not only my role in politics — it’s part of what drives the way I think about legislation,” Abrams told DealBook. Here are highlights from our interview:

What is the difference between politics and business?

The deliverable is different in business. Both have customers, but in business, you get to pick your customers. You get to decide the kind of products you want to deliver, and you can narrow down the type of customer who’s likely to shop with you because of the type of product you deliver. Politics is about delivering for a very broad cross section who have disparate and diverse needs.

Your book is about small businesses. How would you measure the success or failure of the Paycheck Protection Program?

I think it was inefficient. I think for certain communities, it was ultimately wholly ineffective. I know that the first run of PPP, if you were a Black-owned business, your ability to secure those loans was almost negligible. And the same thing was true for other communities of color. Small businesses were often outmatched by large companies who had faster access to banks, willing to allocate those dollars. We have to treat small businesses as small businesses, and we have to reassess what we call a small business.

In the aftermath of the murder of George Floyd, there were a lot of pledges made by corporate America, and specifically by the banks, to do better by minorities — in particular Black-owned businesses, small businesses. Do you think that was real or rhetoric?

I think it was well-intended, but it has been poorly deployed. I mean, people want to do right. And I think they meant it. One of the issues is, how do you identify who should receive these funds? Big corporations make decisions at their scale, not at the small business scale. There are existing and structural impediments for small businesses that major corporations either do not understand or do not remember. And that’s what has to be solved if we want those pledges to be made real.

Read the full interview here.


  • The financier Chamath Palihapitiya used borrowed money to finance much of his investments in the SPAC deals for Virgin Galactic and Clover Health; he and Richard Branson also face a shareholder lawsuit over what they knew about flaws in Virgin Galactic spaceships. (FT, Insider)

  • The enormous I.P.O. of the state-owned Life Insurance Corporation of India is likely to be delayed because of the war in Ukraine. (Bloomberg)

  • Sony will buy the production company behind “American Idol” and “90 Day Fiancé” in a $350 million deal. (Deadline)


  • Have cities’ vaccine and mask mandates worked? (WaPo)

  • Representative Pete Sessions, Republican of Texas, opposes a ban on Congressional stock trading — but appears to have violated existing disclosure requirements for his investments. (Insider)

  • “Economic Ties Among Nations Spur Peace. Or Do They?” (NYT)

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