Is Inflation Really Our Friend‪?‬ Is This Really a Thing?

Inflation hasn’t been much of an issue since Jimmy Carter was in office. But—like Mom Jeans and mullets—it’s totally back. This time, though, it feels different. We’re paying more than ever at the pump and in the grocery stores, so what’s to blame? Is it government spending? Supply chain shortages? The war in Ukraine? We’ve got questions, so we turned to UCF economist Sean Snaith for answers.



Additional Resources

Want to learn more? Check out Snaith’s latest U.S. Economic Report from UCF’s Institute for Economic Forecasting.



Featured Guests



Sean Snaith, Ph.D. - Director, Institute for Economic Forecasting



 

Episode Transcription

Paul Jarley: Inflation hasn't really been an issue since the Carter years. That Saturday Night Live skit was Dan Aykroyd impersonating Jimmy Carter. Inflation is definitely not the friend of people who are on fixed incomes. Today's inflation, though, feels a little different. Some people think it's not a surprise. We printed a bunch of money during the pandemic, and we're suffering the consequences to that. Spending was high, particularly government spending.



Some people blame it on supply chain shortages. Some people blame it on the war in Ukraine. Some people believe it's a government conspiracy. To sort through all of those things, when Sean gets here, we will have a conversation with him that will help us shed some light on where inflation really is today and where we think it's going in the future.



Well, here he is. I'm assuming you're in big demand these days.



Sean Snaith: Yeah. I've spoken on at least two occasions about inflation over the past year and a half.



Paul Jarley: So you raising your prices, given all this demand?



Sean Snaith: No, competition's too fierce.



Paul Jarley: Really? Yeah.



Sean Snaith: Yeah. Economists are a dime a dozen.



Paul Jarley: Well, that's probably true, but you're the prettiest one I have, buddy.



Sean Snaith: Aw. You're like my magic mirror. What fairy tale was that? Who's the fairest economist in the land?



Paul Jarley: Oh, that's not even close. I mean, it's a low bar if you've met most economists, right?



Sean Snaith: I build a career on low expectations.



Paul Jarley: There's no GQ for economics. I've never seen it.



Sean Snaith: No. We did do a GDP GQ...



Paul Jarley: There you go. Very nice.



Sean Snaith: But yeah, the model was not an attractive man.



Paul Jarley: I would imagine not. So how unattractive is it right now?



Sean Snaith: Well, we're making the call when our release goes out that we are in or very close to a recession right now. And speaking to different groups and to the media over the past year, all of this can be traced back to the policy response to COVID-19 in 2020.



Paul Jarley: We'll come to that in a couple minutes.



A few weeks ago I was driving home and when I drive home from the gym, I tend to put on sports talk radio. It's my time to kind of catch up with. And the guy was railing against the inflation number in the sense that he didn't believe it, that he thought the reported one was too low. And he was quoting the doubling in gas prices over a period. And yeah. So talk a little bit about how that inflation number is actually put together and what it really means.



Sean Snaith: Many of the variables in macroeconomics have measurement issues. Financial markets, interest rates...



Paul Jarley: Pretty simple stuff right?



Sean Snaith: To the second on the spot. When you start talking about GDP, employment, unemployment inflation, now you're dealing with something that's not as directly observable.