Ep. 154: AI, Iran, and CPI

Thank you for all the cards and letters. The Inflation Guy dropped in today, to talk about the AI Menace as well as yesterday's CPI report and the near-term trajectory of inflation. This is not a return to a full-time podcasting schedule, but it's at least a positive sign! NOTES Blog for this month’s CPI: “Inflation Guy’s CPI Summary (February 2026)” (https://inflationguy.blog/2026/03/11/inflation-guys-cpi-summary-february-2026/ ) Apollo-sourced chart on New Business Formation:  https://inflationguy.blog/wp-content/uploads/2026/03/apollo-newbiz-formation-chart.jpg   Robert J. Shiller: Narrative Economics: How Stories Go Viral and Drive Major Economic Events (https://amzn.to/4lqIXFv) To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ An inflation-indexed currency you can now mint from our website: https://usdicoin.com/

It's hard to believe we waited two months for that. The Inflation Guy pulls no punches here. Although he is a serious defender of the Bureau of Labor Statistics' CPI team, he did not mince words in talking about today's report. But it's still data, and the IG tells you what it means. NOTES Blog for this month’s CPI: “Inflation Guy’s CPI Summary (November 2025)” (https://inflationguy.blog/2025/12/18/inflation-guys-cpi-summary-november-2025/ ) Blog on hedonic adjustment “Why Hedonic Adjustment in the CPI Shouldn’t Tick You Off”  https://inflationguy.blog/2025/12/10/why-hedonic-adjustment-in-the-cpi-shouldnt-tick-you-off/ To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ An inflation-indexed currency you can now mint from our website: https://usdicoin.com/

This CPI report is potentially unusual and extra-valuable since there is a chance there won't be a CPI released next month. It's a good thing, then, that the current data was a little softer-than-expected since that helps to lock in Fed eases (although the Fed doesn't really care about the exact level of inflation any more as long as it isn't clearly headed higher). Hear the Inflation Guy break it down this month, and savor it in case the BLS doesn't release the CPI next month!   NOTES Blog for this month’s CPI: “Inflation Guy’s CPI Summary (September 2025)” (https://inflationguy.blog/2025/10/24/inflation-guys-cpi-summary-september-2025/ ) Blog on fallback mechanism for CPI: “What Happens if CPI Isn’t Released?” https://inflationguy.blog/2023/09/27/what-happens-if-cpi-isnt-released/ To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ An inflation-indexed currency you can now mint from our website: https://usdicoin.com/  

The Inflation Guy was sorely tempted to title this podcast, "Two Beautiful Women," because he's not above being clickbaity. But he also cannot resist a pun, and that idea won. This episode after all is about AI, and one of the 'leakages' that people don't tend to think about but that is evident in the world at large when you look at how people are using AI. The Inflation Guy explains. He doesn't talk much about inflation in the episode - but if AI is exaggerated, then all of the people who say that AI will solve the inflation problem...are building their house of faith on sand.   NOTES Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2025)” (https://inflationguy.blog/2025/09/11/inflation-guys-cpi-summary-august-2025/ ) To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ An inflation-indexed currency you can now mint from our website: https://usdicoin.com/

But not 'Incompetence'! We didn't use the word 'Incompetence' in the title of the episode! We have to admit, it was tempting. But of all of the examples of incompetence that spring to mind from the last thirty-five years the Inflation Guy has been watching markets and politics and economists, the current examples just don't rank in the top tier. Now, the COVID years...that was some good incompetence there! Not that we are nostalgic for those years. Anywho, in this episode the Inflation Guy tackles three mostly-unconnected topics. The government shutdown, the question of whether rising GDP growth is inconsistent with weaker employment growth, and the uniqueness (or lack thereof) of current 'attacks' on the 'independence' of the Federal Reserve. Enjoy.   NOTES Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2025)” (https://inflationguy.blog/2025/09/11/inflation-guys-cpi-summary-august-2025/ ) Blog about “What Happens if CPI Isn’t Released?” (https://inflationguy.blog/2023/09/27/what-happens-if-cpi-isnt-released/ ) To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ An inflation-indexed currency you can now mint from our website: https://usdicoin.com/

In his role as middle-school cross country coach, the Inflation Guy is fond of reminding runners that they should "get comfortable with being uncomfortable." The same, it seems, is true of inflation! From the lens of median inflation, it has leveled out around 3.6% and there are no real signs and no real math that bring it lots lower any time soon. But more interesting perhaps is how the Fed reaction function has changed. Listen to the Inflation Guy explain why the CPI report should still be important to investors even though it may no longer be very important to policymakers. NOTES Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2025)” (https://inflationguy.blog/2025/09/11/inflation-guys-cpi-summary-august-2025/ ) Blog about the Fed’s abandonment of the important part of inflation targeting: “The Fate of FAIT was Fated” (https://inflationguy.blog/2025/09/02/the-fate-of-fait-was-fated/ ) To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ Check out the latest and greatest cryptocurrency – stable in real space! https://usdicoin.com/

For the first time in a while, core CPI exceeded expectations. For the first time in a while, core services and core goods both accelerated on a year-over-year basis. But what is not at all new is that median inflation is settling in the high-3% range, roughly 3.65% y/y with today's report. Get used to it! And get used to the Federal Reserve easing anyway...   NOTES Blog for this month’s CPI: “Inflation Guy’s CPI Summary (July 2025)” (https://inflationguy.blog/2025/08/12/inflation-guys-cpi-summary-july-2025/ ) To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ Check out the latest and greatest cryptocurrency – stable in real space! https://usdicoin.com/

How important is 30% of the CPI? How much should we care about the summary dismissal of the head of the Bureau of Labor Statistics? Is this a sign that the end of government credibility (okay, stop laughing) is nigh? The Inflation Guy addresses these questions and also muses about the out-of-sync pendulums that are currently swinging in our economy and the effect of these on the overall outcomes.  NOTES Video of spontaneous synchronization: https://www.youtube.com/watch?v=T58lGKREubo Blog for this month’s CPI: “Inflation Guy’s CPI Summary (June 2025)” (https://inflationguy.blog/2025/07/15/inflation-guys-cpi-summary-june-2025/ ) To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ Check out the latest and greatest cryptocurrency – stable in real space! https://usdicoin.com/

It's time for the monthly CPI report! While the core CPI was another (small) downward surprise, the Inflation Guy in this podcast explains why the internals of the number (and the optics going forward, see Ep. 145) are actually not very good and that there is not at the moment any clear path to get to the Fed's 2% inflation goal. He discusses the policy implications of that - along with the effect of tariffs and of 'mass' deportations.    NOTES Blog for this month’s CPI: “Inflation Guy’s CPI Summary (June 2025)” (https://inflationguy.blog/2025/07/15/inflation-guys-cpi-summary-june-2025/ ) To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ Check out the latest and greatest cryptocurrency – stable in real space! https://usdicoin.com/

The Inflation Guy does not typically do a CPI preview episode, and this isn't one either. However, he felt it was important to telegraph to investors who aren't actually inflation traders that there are some non-tariff reasons that the CPI is about to re-accelerate for at least the balance of the year. Even though this is known (and priced into inflation swaps), there's every chance that when it happens it will surprise some people and others will attribute to tariffs what should be attributed to simple mathematics. This is a brief but important episode to set expectations for the coming few months.   NOTES Blog for last month’s CPI: “Inflation Guy’s CPI Summary (May 2025)” (https://inflationguy.blog/2025/06/11/inflation-guys-cpi-summary-may-2025/ ) Ep. 140: White Whale Spotted - Inflation-Linked Cash - the USDi Coin: https://inflationguy.podbean.com/e/ep-140-white-whale-spotted-inflation-linked-cash-the-usdi-coin/ To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/    To Subscribe for free to the blog: https://inflationguy.blog/ Interested in becoming a customer of Inflation Guy? https://www.EnduringInvestments.com/ Check out the latest and greatest cryptocurrency – stable in real space! https://usdicoin.com/