(exhales sharply) - Rolling?

Y'all check this.

All right, so as of April 2022, things are a lot more expensive than they were compared to April 2021.

Clothes?

That's up 5.5%.

Meat and eggs, up 14%.

Electricity?

That's up 11%.

Gas is up 48%.

How you gonna deal with that?

13.5% more expensive for coffee.

Bedding's up 15% y'all.

It's not just your rent, which by the way is up almost 5%.

Everything is too dang high.

What up world?

Myles Bess here, journalist, host of Above The Noise.

And today we're gonna get into it and ask, why is everything so dang expensive?

Well, the answer to that my friends has a lot to do with inflation, which is just what economists call the increase in the cost of goods and services over time.

Inflation is the reason that back in the day, your grandparents could get a house for like $20.

Meanwhile, now I gotta take out a loan just to order takeout.

But to be clear, it's not just that the price of one good has gone up, it's really that the price of a bunch of different types of things has gone up.

And ideally we expect little increases to happen every year, usually around 2%.

And that's why a lot of jobs, you know give employees the cost of living raises so that their paychecks will have the same purchasing power from year to year.

You know, like if things are generally a little bit more expensive, they pay you a little bit more so you can buy the same amount of stuff.

And you know, a little inflation is a sign of a healthy economy.

But now inflation is a lot higher than 2%.

As of March 2022 inflation was around eight and a half percent which is the highest it's been in 40 years.

And the media is freaking out and that's got people freaking out.

Inflation is now the number one issue Americans say they worry about.

So what the heck is going on?

Now, normally when I start tryna understand economics I get... - [Woman] Miles, wake up!

- Ah man, see.

Yeah, I always fall asleep when we talk about economics.

But I mean, I do like to buy things.

I mean, where do you think this dope t-shirt wardrobe comes from?

It doesn't just pay for itself people.

So I figure it's time I start understanding what all this inflation talk is all about.

So the last time inflation was high was back in the late '70s.

In 1977, it was around 6.5%.

And then by 1980, it hopped out at 14.8%.

It was not great, not in the slightest.

In fact, in 1974 President Ford declares that inflation was public enemy number one.

- Inflation, our public enemy number one.

- And some economists argued that this fear of inflation, in part, drove inflation.

The thinking was, oh my gosh, inflation is outta control.

So to keep up with this crazy high cost of living, we gotta raise our prices on stuff we sell so we can earn more money.

It's a vicious cycle.

And the government got us out of this cycle by doing something drastic.

Raising interest rates a ton and sending us into a big recession.

But that's a story for another time.

Stay tuned for part two of this video.

No I, I'm being dead serious right now.

We are doing two videos about this topic.

It's a very dense topic.

Okay.

So inflation becomes a problem when the cost of stuff goes up but how much people get paid doesn't.

In that case, you end up not being able to buy as much stuff or your purchasing power goes down.

Now you've probably heard that wages have been going up due to labor shortages and companies needing to attract workers, and all that's true.

Hourly wages for the lowest paid workers did go up by about 6.5%.

But if you're making close to minimum wage, that increase doesn't really buy you much more purchasing power.

And y'all, back in the day I was working at the donut shop, right, making $12 an hour.

And then the following year, it went up to 12.50 an hour.

And that's about a 4.2% raise.

But that equates to an extra what?

20 bucks a week.

So that's like half a dozen donuts.

That's nothing.

And even the middle class barely kept up with the rise in prices.

But if you're making more than 150K, good for you.

You're probably not feeling inflation too much.

But for the rest of us inflation still stinks.

Okay.

So that's where we are, but why?

Well, like everything else these days, the answer gets political.

Both parties like to point to explanations that benefit their agenda.

You know, it's all because of Biden's stimulus handouts.

No, it's fossil fuels!

No, lockdowns during the pandemic!

Or, my go-to source of blame, greedy big businesses.

But, of course, it's not just one thing that's causing this mess.

And to be honest, even economists don't agree on exactly what and how much all this stuff is affecting inflation.

- There's a lot of debate about what can drive inflation or what drives inflation right now.

- That's Damon Jones.

He's an economist and professor at the University of Chicago.

- The first thing is what we call the supply side of the economy.

And COVID created created a lot of challenges on that side.

- Because of COVID, there's lots of shortages of things.

You know, you may have heard of the term supply chain issues.

Basically materials stopped being mined, factories shut down, workers couldn't go to work to make stuff, shipping companies reduced their schedules.

You get the idea.

There was much less stuff being made, so less stuff to buy.

- The other thing that can cause prices to rise is what we call the demand side.

So if a lot of people wanna buy something and the price is gonna go up if companies, you know, have more people that are competing to buy the same sort of thing.

- During COVID people were stuck at home and started buying stuff online to make their home situations nicer.

Quick, give me that PlayStation!

Oh God.

Anyway.

Money people would've spent going out, was spent on stuff online.

So demand was high, supply was low.

Voila.

You got inflation.

Now a lot of people blame COVID relief and stimulus checks on padding people's wallets and being a big driver of inflation.

But how much it drove inflation is up for debate.

A recent report from the Federal Reserve of San Francisco explains that COVID stimulus, and I quote, "could explain about three percentage points of the recent rise in inflation.

However, without these spending measures the economy might have tipped into outright deflation and slower economic growth, the consequences of which would've been harder to manage."

And I should point out, this factors in stimmy money from both Trump and Biden's bills, not just Bidens.

But pandemic stuff isn't the only cause of this inflation.

The rising cost of fossil fuels is also a huge driver.

(Myles chuckling) Very punny.

The US is still hugely dependent on fossil fuels.

And the price of oil is largely determined by supply and demand of the global market, which can be really volatile.

The war in Ukraine, for instance, sent gas prices soaring.

And then, my favorite villain, big bad corporations are partially to blame too.

Big companies are seeing record profits but are still raising prices because they can.

Here's the deal.

In a lot of industries, a few big mega corporations control a huge portion of the market.

And when there's less competition it's easier for companies to raise prices.

They'll just raise prices alongside one another.

Just look at the beef packing industry.

In 1977, the largest four companies controlled just 25% of the market.

Now they control 82% of the market.

And guess what?

They've risen their prices and seen some of their largest profits in history since December of 2020.

Suggesting that it's not just higher costs that's driving their prices up.

They're doing it cause they can.

So in conclusion, a bunch of different things are influencing the inflation we're seeing today.

So the next question is what can we do about it?

Well, you gotta stay tuned for part two of this video.

In the meantime, we'd love to hear how inflation is infected, infecting you.

(woman laughing) It's a disease and it's everywhere.

Until next time, I'm Myles Bess.

Peace out.