Talk:2021–2023 inflation surge

"price gouging" politics

The whole section on price gouging cites think tank after think tank in what seems like an effort to bolster a narrative that's more political than economic. If we remove the think tanks from the section, what is left and what do those sources say about the significance of corporate profits in this calculus? Think tanks are the very definition of an unreliable source on here -it is self-published research designed specifically for some type of activism. Jonathan f1 (talk) 19:56, 4 August 2024 (UTC)

I see just two references to think tanks, among many references. soibangla (talk) 20:09, 4 August 2024 (UTC)

Technically that's correct -the main references are mostly not think tanks except in two instances (but again, think tanks are not RS and so that number should be zero). However, when we peel back a lot of the journalism in that section, we see commentary from numerous think tanks and non-economists. For example, the content on the meat industry cites this source[1] and quotes Ricardo Salvador. Who is Salvador?

Ricardo Salvador, a scientist with the Union of Concerned Scientists, a nonprofit advocacy group."

And this is really the issue here. I would request a literature review to determine how the "price gouging" narrative has been received by mainstream economists, and then perhaps rewrite the section so that it's more clear on where this information is coming from. Without investigating each source, readers have no way of telling if they're reading the opinion of an economist or some advocacy group, as both opinions appear side-by-side as if they carry equal weight. Jonathan f1 (talk) 21:44, 4 August 2024 (UTC)

I see one source that kinda nudged the needle on my biasmeter a bit, so I opted against including it, though someone else did and I don't see a compelling reason to remove it, as its findings seem generally corroborated by other sources. Salvador is with the Union of Concerned Scientists and was cited by a reliable source, and I am unaware of controversies surrounding that group. The discussion seems well-sourced and balanced to me. What do others think? soibangla (talk) 22:14, 4 August 2024 (UTC)

Okay, so the source that cites Salvador also quotes an academic economist, who is not quoted in that section. This CBS source is also cited in that section, which relies entirely on reports by advocacy groups.[2]. I strongly believe that if we remove all these think tanks and advocacy groups from the equation (even removing their opinions from the news sources and focus solely on what economists are saying) we'd be left with more objective economic sources like these[3][4][5] -which either dispute the 'greedflation' narrative or completely ignore it. This to me implies that this subject is fundamentally political theater.

I also don't understand the argument. By definition, inflation is when there's too much money and credit chasing a smaller quantity of goods and services. And also by definition, price gouging is a response to this phenomenon of the supply of money and consumer demand. This is what Furman meant when he said the argument is technically correct, but is analogous to blaming gravity for a plane crash. And for the record, I also think the Republican argument about stimulus spending is also political nonsense -both government spending and price gouging contributed to inflation, but were not primary causes. Jonathan f1 (talk) 22:34, 4 August 2024 (UTC)

well, gouging was scoffed-at by many early on, and that was reflected in the article early on by a reference to "Democratic politicians" alleging gouging, notably Elizabeth Warren, but later data and analysis came out that supported the idea soibangla (talk) 22:54, 4 August 2024 (UTC)

It's not that there are issues with the Union of Concerned Scientists, but rather that they are not qualified as a reliable source for economics. This is a highly technical field to the extent where advocacy groups have a very easy time manipulating statistics in ways most journalists would not be able to understand. Take markups as an example. There is actually no direct accounting relationship between "corporate profits" and inflation (profit itself breaks down into several accounting identities, including retained earnings that firms put aside for future investment, which are never 'zero'), but inflation is directly affected by markup growth. One way that this happens is when there's a market concentration or an increase in monopoly power, which is the conclusion that's been reached by various advocacy groups, and the argument that's being made by certain politicians. But another way that markups change is when companies anticipate future increases in their marginal cost of production, which has nothing to do with monopoly power. Since this is essentially an unobservable factor, it takes more sophisticated cross-industry analyses to determine the actual cause, rather than the instinct to assume markup growth automatically has something to do with market leverage. See[6].

Yes, I'm aware that Elizabeth Warren began blaming corporate greed for inflation from the very beginning. There was one economist, I forget who, who once compared her to a guy with a hammer who sees a nail everywhere he looks. The issue here is that while 'price gouging' is being taken more seriously than it was earlier (and there is still no consensus), the section in question could use better sourcing and more technical nuance. It is one thing to say markup growth is a significant contributor to inflation, and quite another to shout "corporate greed!" and "greedflation!". There is still no evidence for any of these political arguments. Jonathan f1 (talk) 23:43, 4 August 2024 (UTC)

Corporate greed is just a popular short-hand term for the phenomenon of firms increasing their margins beyond the extent of their cost increases, which we go into some depth about with reliable sources, some of which dismiss it while others affirm it. I anticipate we'll see more as others chew on the data. I don't see a problem and I will step aside and let others opine. soibangla (talk) 01:20, 5 August 2024 (UTC)

Okay, same here. I'll let others jump in but just to reiterate the point that the arguments politicians are making specifically have to do with monopoly power (the president even saying that "capitalism without competition is exploitation"), but that this isn't what the evidence indicates is going on with markup growth (see link 13). So while the actual contribution of markup growth to inflation is itself disputed, even conceding this point there's still no evidence it's caused by market concentration. Jonathan f1 (talk) 01:30, 5 August 2024 (UTC)

Groundwork Collaborative was just removed (I added the content to the think tank's Wikipedia article for now) and am fine either way with including here, though I will note that it has been cited in a lot in reliable sources in the past couple weeks. I generally am skeptical with more partisan think tanks as well, but the Union of Concerned Scientists is not one of them, and if lots of media sources are citing a think tank, I wonder if there isn't a lot of good academic research (or it is still in peer-review). Superb Owl (talk) 20:13, 17 August 2024 (UTC)

evidently I failed to save my edit

saying "the biggest impact, dragging the overall inflation number downward, was the 10.9% decline in used car prices" is inaccurate, or unsourced at least.

it had the largest percent decline (in the Yahoo chart, anyway) but used cars have only a 1.9% weight in CPI. Men's suits, sport coats, and outerwear had a larger decline at 12.0%, but it has only a 0.07% weight

https://www.bls.gov/news.release/cpi.t02.htm soibangla (talk) 01:27, 16 August 2024 (UTC)

Include discussion of AI, crypto demand in 'Shifting demand' subsection?

Here's the latest draft (and here's the new shifting demand subsection) Superb Owl (talk) 20:23, 20 August 2024 (UTC)

I would say WP:NOTCRYSTALBALL - unless sources say AI will/is projected to increase electricity demand enough to increase prices and thereby cause inflation than including that is WP:OR. Electric cars and converting home HVAC to heat pumps will likely drive a 10x greater increase in electricity demand, but since that is happening so slowly we're not seeing effects yet; businesses are dumping BILLIONS yearly into purchasing AI compute power.

"Electric vehicles could account for 6-8% of total electricity demand by 2035, up from 0.5% today" [7] ---Avatar317^(talk) 23:32, 22 August 2024 (UTC)

A source in your draft page says: "Electric vehicles and heat pumps are driving consumer electricity demand higher, while industrial onshoring and the rise of data centers and artificial intelligence are also putting upward pressure on prices, the analysts said." [8] - So maybe the reality is "all of the above" are causing increased electricity demand. If supply can't meet it, we get inflation. ---Avatar317^(talk) 23:42, 22 August 2024 (UTC)

top chart

SiennaVue, I really have to say I prefer the original chart because the article is not about comparing this episode to previous cycles over decades, it's about comparing this episode to conditions immediately preceding it, and by jamming too many values into one chart it makes it more difficult for readers to examine the values over the relevant time period. this is not the inflation article, it's about a specific limited aberration. soibangla (talk) 20:18, 11 September 2024 (UTC)

I know you do, and you and I have had this discussion before. The chart over decades is absolutely appropriate. Readers need to know what is true and what is not, especially in light of the talking points currently being spewed from one side of the political aisle saying that the 2021/2022 surge was the "highest" inflation in years, when in fact, this is not the case. [9] Without any historical context as to previous cycles which were far higher than recently, readers will fall prey to misinformation. Historical context is important. SiennaVue (talk) 20:31, 11 September 2024 (UTC)

welp, JSwift49 seems to agree with me.[10] what do others think? soibangla (talk) 20:37, 11 September 2024 (UTC)

I do agree with soibangla here. I think there’s certainly a place for historical context/a longer term chart in the article, but it’s about a specific aberration, shouldn’t the lead graph focus on that? If it’s notable enough to have an article of its own, then it’s not like a dedicated graph will give it unwarranted emphasis. JSwift49 21:21, 11 September 2024 (UTC)

I would agree with this statement, except that the ongoing presence of misinformation amongst readers (voters) and political circles justifies that additional historical context is needed at the outset. We know that statistically speaking, most lay readers who arrive to this article will probably not read beyond the lead. There is an inverse proportion between the length and organization of an article and reader engagement. Therefore, the lead should be a brief summary of the topic (which it does, but probably could be cleaned up a bit further), followed by brief a visual representation of the topic that can easily reconcile the subject and any potential misinformation. SiennaVue (talk) 21:39, 11 September 2024 (UTC)

I personally don't agree because a lead graph, in my opinion, should be a visual representation of the article topic – regardless of political context. But I would support the lead text more explicitly comparing this surge to other surges in history that were worse/similar, so people don't get the wrong idea. JSwift49 22:12, 11 September 2024 (UTC)

sentence #2: Many countries saw their highest inflation rates in decades soibangla (talk) 22:17, 11 September 2024 (UTC)

I agree with SiennaVue here; I generally always like to give the reader more context and information when possible, assuming that maybe this is the first ever article about inflation that a reader reads. As long as the additional data doesn't cause confusion, my vote is for the additional context of the inflation of the 1970's to be included, as often it is mentioned in current news articles about the rate, and how the Fed responded to it and what that caused in the '70's. ---Avatar317^(talk) 00:37, 12 September 2024 (UTC)

I disagree with assuming that maybe, because the broader inflation article exists. this article is about a specific episode, the first in some 40 years, that btw turned out to be transient after all (2.6% today[11]). As long as the additional data doesn't cause confusion but it actually does, because it distracts readers from this transient episode with really old data. this article is not the place to discuss, in this chart, previous episodes and how Arthur F. Burns and Paul Volcker handled them. this should be discussed in text, as it already is in the lead: Many countries saw their highest inflation rates in decades soibangla (talk) 01:38, 12 September 2024 (UTC)

Many countries saw their highest inflation rates in decades leaves readers clueless about the QUANTITY associated with that comparison. "A majority" is 51-100%, but there's a huge difference between those two bounds. To see/show the quantified difference is much more informative, and the comparison to the 1970's is discussed in MANY sources; this illustrates that well-sourced comparison.

As a side comment - I also disagree with you that this was transient; if it was, then the Fed would not have needed to take ANY action; but they did, they increased interest rates. They delayed taking action because they called this inflation "transient". ---Avatar317^(talk) 20:39, 12 September 2024 (UTC)

we long had a table right under the chart showing changes in inflation rates for many countries/regions but it got dropped deep into the article.

the comparison to the 1970's is discussed in MANY sources in what context? the typical some say this episode raises concerns of pernicious inflation for a decade like in the 1970s leading to stagflation and a deep recession? I saw many variants of that. this episode was nothing like that, but I understand the motives of some to portray this as the beginning of a decade of hyperinflation followed by the next Great Depression and we're all gonna die and blah blah blah.

I have more to say about transient but little interest in typing all of it. soibangla (talk) 21:07, 12 September 2024 (UTC)

"...I saw many variants of that. this episode was nothing like that, ..." - Right, so don't you think it is good to have a graph which illustrates that in an easy to see and understand manner? Which shows that the integral of/area under the inflation curve was MUCH smaller for this episode? ---Avatar317^(talk) 04:55, 13 September 2024 (UTC)

not in this article, no, because the consequence is the values during the relevant period get squished together and less easily visualized. maybe an editor can add a comparative recessions paragraph/table in the body, but up top I suspect most readers want to immediately see at a glance and scan what happened in this episode, because that's the subject of the article, not History of world inflation surges. soibangla (talk) 05:15, 13 September 2024 (UTC)

I don't see how these individual values are of any importance. I would think that people who care about what the SPECIFIC rate was at a SPECIFIC time would get that info from a TABLE of values, but clearly you hold a different opinion. ---Avatar317^(talk) 05:26, 13 September 2024 (UTC)

yes I do, which is why I include a link to the original interactive FRED chart so readers can hover and inspect values, change the date range, do transforms etc. basically, a user can change the chart into the version you prefer on the fly, while leaving the chart in the article unchanged. soibangla (talk) 05:36, 13 September 2024 (UTC)