I implore you to avoid just reading the headlines. Instead, read the whole story.
We should all know that by now, having been repeatedly suckered into stories with alluring clickbait across the internet. For instance, you may have seen or heard that “Consumer prices heated up in July.”
Here is a better headline for you: “Consumer prices are perhaps the only thing that didn’t heat up in July.”
Inflation had been trending down, and it still is. Why should you trust me? Well, I looked into the math of inflation in May when I predicted that if “this trend continues for another two months, we can expect the 4.9% [annual inflation] to drop to just over a relatively healthy 3%.” I was being conservative. It actually dropped to 3%.
Of course, everyone is likely going to be right some of the time. Still, I was going to be right because it was not a guess but simply a matter of math. Let’s pay attention to the math for July, as well.
Sure, annual inflation for the year ending July is back up to 3.2% from 3% in June. However, that is still the second lowest rate in over two years. But the fact that annual inflation is up does not mean that inflation went up in July. In fact, it didn’t.
I apologize for the dense nature of this paragraph, but here are the numbers. Inflation for the month of July was 0.2% – well below the average for the other 11 months of the year. In fact, 0.2% is the same rate as the month of June when inflation dropped from 4% to 3%. How is that possible? It is because the 0.2% inflation for the month of June 2023 replaced an extraordinarily high 1.2% for June 2022, resulting in a large decrease in the annual rate for June 2023. Conversely, the 0.2% in July 2023 replaced the 0% in July 2022, resulting in a slight increase in the annual rate for July 2023.
Of course, some things are more expensive, particularly the cost of eating out and housing. That said, the good news is that Utah’s housing costs seem to be stabilizing.
Unfortunately, we may hover around 3% for a while – well above the Federal Reserve’s 2% target – but we are fortunately a long way from the highpoint of over 9% that we suffered in July 2022.
These mathematical realities should be recognized by Utahns and encourage behavior to be largely “business as usual.” This is especially true when negative consumer and business expectations themselves can court the recession that the Federal Reserve itself is doing its best to avoid.
It will likely be more of the same when the August data are released on Sept. 13.
I know that “Hovering around 3%” is not the sexiest of headlines, but understanding the math behind the scary headlines can make them much less scary. Further, it’s time we all start pushing back against the clickbait.
Shawn Teigen
Shawn Teigen is the president of the Utah Foundation. He has worked there for over a decade — researching a broad swath of public policy issues. He also teaches a public policy course at the University of Utah. Shawn has worked as a housing policy analyst, a consultant to early-stage businesses and a founder of an organization focused on foreign investment-related economic development. He holds a Bachelor of Science degree in Management and a Master of Public Policy degree from the University of Utah. He serves as a board member for several public-sector, private-sector and non-profit organizations. Shawn has always been active in volunteering, including having spent two years in Kazakhstan with the U.S. Peace Corps.