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ECONOMY

Growing Pains

Credit: Will Chase / Axios

Prices rose 4.2% over last year according to Consumer Price Index (CPI) data released yesterday—its highest pace since 2008. Does that mean inflation is nigh? Is it time to start hording gold in the bunker? Let’s investigate.

Some data points on that CPI report:

Energy prices led all categories, with a 25% increase. This increase comes after a period of historically low energy costs, dating to when the pandemic first started and demand cratered.
Used car and truck prices rose 21%, as rental car companies compete with buyers to snap up any used cars on the market. Meanwhile, new car production, paused during the pandemic and now constrained by the chip shortage, struggles to meet demand.
These two categories alone account for something like half of the CPI increase. Much of the rest comes from sectors caught flatfooted when demand snapped back so fast: airfare, hotels, restaurants, concert tickets, etc. So, to any inflation hawks out there: RELAX.

The circumstance we find ourselves in only happens once in a lifetime. A normal economy would never purposely squelch demand for a year and then ramp back up. As such, you’ll get some weird anomalies along the way.

Like this one:

As the costs of energy and microchips rise, the financial incentive to ‘mine’ bitcoin (the energy intensive computing process that logs transactions and rewards the fastest computers with new bitcoins) decreases. That dynamic, paired with the dropping price of Bitcoin thanks to Telsa’s late but correct decision that the Bitcoin’s underlying framework is an environmental disaster (which it is), and new opportunities to generate big returns on capital investments (say, to build a new chip manufacturing plant) will help relieve the chip supply shortage, thus returning rental car prices back to their usual, affordable level. Weird, right?

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CHECK THIS OUT

Dreamscapes

Credit: The New Yorker

The living space above does not exist, nor will it ever. The image is not a photograph, but a 3D rendering, entirely speculative. It's from of a thriving community of designers who share computer-generated interiors online, paper architecture for Instagram.

BREAK ROOM

If anybody ever did that to me, the friendship is over.
Immediate excommunication.