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SMELL THE COFFEE
The online investment news publication the Kobeissi Letter [[link removed]] generated an internet storm last week when they offered a striking claim that went viral: according to their post, the federal Bureau of Labor Statistics was removing the price of coffee from their inflation calculation , even though most American adults regularly drink coffee. A screenshot seemed to show that the coffee series was, in fact, being discontinued, and a theory of the case was offered: coffee prices would no longer be part of inflation figures because coffee prices were increasing too quickly, and the statisticians wanted to cover up inflation. As conspiracy theories go, it sounds pretty credible, except… it’s completely wrong [[link removed]] .
In fact, the price of coffee is not and was never going to be removed from official inflation calculations . The screenshot bandied about as evidence was actually about a different set of data entirely. But that didn’t stop the story from bouncing around everywhere and quite possibly, having an impact on the way people think about inflation and the economy. Which means that a story about coffee prices increasing so fast they’re being removed from the CPI calculation… which was entirely false … may very well still leave the impression that inflation is higher than is being measured…. and that belief could then be tapped into by corporate CEOs to justify further corporate greedflation . All thanks to a newsletter that also hypes meme stocks.
Make it make sense.
Three Numbers [[link removed]]
$2 billion of work [[link removed]] is performed each year by imprisoned people [[link removed]] who are sent to work for private companies outside the prison system . A former Alabama prisoner is suing over that state’s forced labor system, in which prisoners are paid just a few dollars an hour to work for companies including a Hyundai supplier, Budweiser, McDonald’s, and Wendy’s.
$6 billion [[link removed]] of flight credits are held by airlines and will eventually become profit [[link removed]] if the credits remain unused until they expire , according to reporting by Lever News . Several members of Congress attempted to block a new federal rule requiring automatic cash refunds instead of credits when a flight is canceled or delayed for more than three hours, but then relented when their shenanigans were exposed .
80% of people [[link removed]] think it should be illegal [[link removed]] to present AI-generated content as if it were written by a human . The company AdVon has reportedly published [[link removed]] almost 100,000 pieces AI-generated content under fake human bylines on the websites of publications including Sports Illustrated , US Weekly , the Miami Herald , and USA Today .
A Chart [[link removed]]
At this point in world history, it’s definitely not news that producing oil is a way to make money by the barrel . But maybe that’s why there hasn’t been enough uproar about the fact that the past few years have been the most profitable years on record [[link removed]] — ever! — for US oil companies. (While the graphic designers behind the chart below tried to create a tie to President Biden by putting the last three years in a box with that label, there’s no reason to think Biden has been helping oil companies price gouge — among other things, it would be political suicide.)
The reason for this profit growth is pretty simple: companies are charging higher prices for oil, even though their own costs haven’t really increased. That means higher gas prices, of course, but it also has broader economic impacts. Because oil and gas are part of the cost of so many goods and services, higher oil prices can mean higher prices for almost everything else, too. And the reason for all this gasflation and greedflation? Simply because they can get away with it. (Oh, and maybe some price-fixing [[link removed]] here and there too.)
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Blowing up the Groupchat [[link removed]]
A whole industry has grown up around negative projections about the fiscal future of Medicare and Social Security . Every time someone runs the numbers and assesses that these critical programs are on pace to “run out of money” by some future date, Serious People [[link removed]?] come out to pronounce the need for employed people to work years longer into old age, or for elderly people to live on a lot less money. (They never seem to mention the possibility of simply taxing high-income people more money to support the program, but that’s a whole other rant.)
But somehow there has been relatively little attention to a newly issued projection which found that these programs are better funded [[link removed]] than they were last year . The reason for the strength is even more telling: “the number of covered workers and average wages will be higher” this year than last year. In other words: more people have more jobs that pay more money . Or, in other, other words: middle-out economics is working — something that everyone should be talking about a lot more, especially in the business press.
Note: The Tapback is taking a few weeks off, but we'll be back in June! In the meantime, don't miss the Pitchfork Economics podcast [[link removed]] for your middle-out economic fix.
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