The Price Spiral Isn’t Over. It’s Just Getting Started.
Brandon Sheridan joined us this week, and the conversation didn’t soften the numbers.
Last Wednesday, we reported that the CPI came in at 3.8%. The next day, the BLS reported that the PPI, the prices producers pay, increased by 6% year over year.
What does that mean?
The PPI leads the CPI. What businesses absorb today, consumers pay tomorrow. When producers face higher input costs, they eventually pass them downstream as higher prices. The latest data shows that the transition is already underway.
What makes the current picture more concerning is the breadth of the increase. Higher oil prices may be the primary driver, but energy costs don’t stay contained; they push up the prices of nearly everything that moves, refrigerates, or is manufactured. That’s contagion, not a one-sector story.
Add to that the pressure from tariffs, which economist Brandon Sheridan flagged as still very much in play, and consumers are looking at multiple cost pressures converging at once. Brace accordingly: CPI is likely to accelerate before it slows.
“This is a Choice”
Here’s what Brandon said on the podcast this week that is a good reminder for all: this isn’t something that happened to us. Tariffs are a policy choice. The Iran conflict accelerated it, but the stair-step rise in prices was already underway before that. And because prices move up like a rocket and come down like a feather, sticky on the way down due to long-term contracts, renegotiation cycles, and producer margins, expecting a fast reversal is wishful thinking.
The labor market is holding, but it’s not dynamic. Brandon noted that with reduced immigration, the economy simply needs fewer new jobs to maintain stability, which makes 115,000 monthly additions look better than they probably are. And less immigration over time means fewer entrepreneurs, less innovation, and more anemic growth further down the road.
What does this mean for your wallet right now? Brandon’s personal story said it better than any chart could: airfare that was $300 rose to $1,200 after the news of Iran broke. He took a connecting flight instead of a direct flight. Gas is running 50–60% higher than it was two months ago, which changes the calculus for which jobs are worth commuting to, how hard people push back on return-to-office mandates, and which big purchases get delayed.
It is easy to focus on the data point and forget the human-centered story behind the data.
What is EENE?
One more thing from this episode worth knowing about:
Brandon is a founding member of EENE — the Economic Education Network for Experiments (eene.org). It’s a research collaboration of 200+ economics instructors across institutions — public, private, HBCUs, R1s — running synchronized classroom experiments to actually answer what works in economics education. Most education research is too small to generalize. EENE is trying to fix that with scale and rigor. They have papers under review and their third annual conference coming up after CTREE in Las Vegas this summer. If you teach economics or know someone who does, this is worth knowing about.
The full conversation — inflation, AI in education, what Microsoft and OpenAI executives actually want from new graduates — is in this week’s episode of The Weekly Rap.
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Great work, all. Matt and I were talking about our shared confusion about this decade's economy. It's easy to look back at previous decades and talk about broad characteristics, but the economy of the 2020s feels really weird.