Covering COVID-19 is a daily Poynter briefing of story ideas about the coronavirus and other timely topics for journalists, written by senior faculty Al Tompkins. Sign up here to have it delivered to your inbox every weekday morning.
The big story tomorrow will be what the new Consumer Price Index figures show. The consensus is that, in January, inflation rose another .4%. That would mean we are running at an annual rate of 7.2%. If you exclude food and energy from the inflation rate, it would be about 5.9% — but why would you exclude those two big components when trying to figure out how much it takes for people to get through the month?
For a peek of what could be in this week’s numbers, the National Federation of Independent Business just released a survey of small businesses and found that 61% increased prices at the beginning of the new year. MarketWatch says that is “the highest percentage since 1974.”
Market survey company KPMG recently said “groceries may cost 14% more this year.” That would mean “a 22% increase in their grocery bill compared to pre-COVID-19 prices.”
The higher prices are, in part, driven by the higher wages that small businesses say they have to pay these days. The report says:
“More small business owners started the New Year raising prices in an attempt to pass on higher inventory, supplies, and labor costs,” said NFIB Chief Economist Bill Dunkelberg. “In addition to inflation issues, owners are also raising compensation at record high rates to attract qualified employees to their open positions.”
Key findings include:
- One of the Index components improved, seven declined, and two were unchanged.
- Owners expecting better business conditions over the next six months increased two points to a net negative 33%. Small business owners remain pessimistic about future economic conditions as this indicator has declined 13 points over the past six months.
- Forty-seven percent of owners reported job openings that could not be filled, a decrease of two points from December.
- Inventory accumulation plans fell five percentage points.
As reported in NFIB’s monthly jobs report, a net 50% (seasonally adjusted) reported raising compensation, a 48-year record high reading. A net 27% plan to raise compensation in the next three months. Eleven percent of owners cited labor costs as their top business problem and 23% said that labor quality was their top business problem.
What is the Consumer Price Index? And is it accurate?
Since the CPI will get a lot of attention tomorrow, let’s be sure we understand what we are talking about and what it includes.
The CPI influences all sorts of things in ways you may not realize. Some union contracts are keyed to the CPI, as are Social Security raises. The CPI is one of the tools that landlords look at to determine rent, and even child support and alimony payments are linked to the CPI.
In December, the single biggest factor in the CPI increase was “increases in the indexes for shelter and for used cars and trucks.” You could make an argument that most people are not routinely buying a car or truck the way they buy bread and pay rent, but the index also includes food and energy, which covers everything from grocery and gasoline prices to electricity and heating oil prices.
There are also indexes that look at inflation (or deflation) in what you spend on household furnishings and operations, apparel, medical care, motor vehicle insurance and recreation. Some indexes go up and some go down.
The indexes that you may watch most closely tomorrow are the ones that rose a lot in December and that probably will keep rising. In December, “The all-items index rose 7.0 percent for the 12 months ending December, the largest 12-month increase since the period ending June 1982. The all items less food and energy index rose 5.5 percent, the largest 12-month change since the period ending February 1991. The energy index rose 29.3 percent over the last year, and the food index increased 6.3 percent.”
December 2021 data (Bureau of Labor Statistics)
Pull out to a wider shot of what all of last year looks like and you begin to get a clearer picture about why people say inflation is starting to hurt. Some of the essential big-ticket costs in daily life went up by a lot.
2021 Consumer Price Index (Bureau of Labor Statistics)
You will see a range of useful new charts on the Bureau of Labor Statistics website on Thursday morning. This is where you will find them. They give you a visual account of the big chunks of the CPI. They also provide a chart comparing select cities against one another. (Click on the name of the city you want to see and the data lights up on the chart.)
You can also look at different regions and even different metro areas of the country. For example, here is Houston’s CPI. And here is Detroit, Seattle, Phoenix, Atlanta and St. Louis.
As you look at those numbers, realize that they are pegged to the index that began in 1982-84. That year was set at a value of 100, so if you see that a region of the country has a CPI of 256 now, that means inflation is up 156% since 1984 for an average inflation rate of 4.1%.
Here is other regional inflation data, including the newest compensation data and energy costs that you may not have explored:
Regional news releases:
The CPI is used to assess the changes in cost of living over time. The price of each item — such as milk, eggs, energy, clothing, transportation, and medical expenses — is taken and averaged on a monthly basis. Then the CPI is calculated by dividing the price of a market basket in a particular year by the price of the same basket in the base year.
The Consumer Price Index is based on the index average from 1982 until 1984, which was set to 100. Therefore, if you see a CPI reading of 140, it indicates a rise of 40% in the inflation level. If the reading was 250, the inflation level indicates a rise of 150%.
Three kinds of inflation
At some level, everybody contributes to inflation when they earn a raise, or when a manufacturer or retailer raises prices to boost profits. Mint.com explains the three basic kinds of inflation. During the pandemic, all three of these forces played a part in driving up prices:
Demand-Pull Inflation
When there is more of a demand for goods and services than what the economy is able to produce.
Example: Consumers want to buy milk but farmers don’t have enough supply, resulting in the price of milk going up.
Cost-Push Inflation
When the costs to produce goods and services increase, causing the prices for those goods and services to also increase.
Example: The tools and materials needed to produce milk increased in price, which causes the price of the milk to increase as well.
Built-In Inflation
When workers expect their salaries to increase in order to maintain their living costs because the prices of goods and services have increased. These workers constantly anticipate prices to rise and demand higher salaries, which contributes to the prices of goods and services rising.
Example: The price of milk increases, and consumers want to be able to afford the milk, so they request their salary to also increase.
How concerned are Americans about inflation?
You might think that inflation and the economy are the top issues on people’s minds. Gallup asks that question every month and interestingly, while concern over inflation is growing, only 20% of Americans list economic concerns as their No. 1 issue. In fact, twice as many people list “poor leadership and the government” or “the coronavirus” as their No. 1 concern.
January 2022 data (Gallup)
January 2022 data (Gallup)
Super Bowl betting will be way up
About 45 million people in 10 states will have access to legalized sports betting this Sunday who did not have it in their state a year ago.
States that recently approved legal sports betting include Arizona, Connecticut, Louisiana, Maryland, North Carolina, North Dakota, South Dakota, Washington, Wisconsin and Wyoming.
(American Gaming Association)
The American Gaming Association says that 31.5 million Americans will place a bet on the game this weekend. The AGA says:
- 18.2 million American adults will place traditional sports wagers online, at a retail sportsbook or with a bookie, up 78 percent from 2021.
- 18.5 million plan to bet casually with friends or as part of a pool or squares contest, up 23 percent from 2021.
- 76 percent say it is important for themselves personally to bet through a legal operator, up 11 percent from 2021.
- 55 percent of bettors plan to wager on the Los Angeles Rams compared to 45 percent on the Cincinnati Bengals.
Fake vaccine cards are everywhere
Grid investigates the open market for fake vaccination cards:
Vendors advertise their wares openly on Facebook, Twitter and other popular platforms. When we made contact with sellers there, they directed us to other platforms, particularly Telegram, to complete sales. Nearly all requested payment in cryptocurrency and provided detailed instructions on how to do so.
The fakes aren’t cheap. Fraudulent CDC cards were commonly advertised online at $100 a card early last year, according to Bruce Linder, emerging threats expert with the cybersecurity firm Check Point Software. By September, prices had doubled to $200, he said.
Prices have risen in recent months, as health officials have pushed booster shots to address the spread of the omicron variant and more employers, venues and governments imposed mandates. By this month, most sellers we observed priced fake credentials between $200 and $650.
Some sellers offered the choice of a fake vaccine card or a fake doctor’s note to claim a medical exemption from vaccine mandates. One seller listed fraudulent negative covid PCR test results. Another claimed access to a nonpublic CDC database of lot numbers and expiration dates of vaccines used for verification, which could enhance the credibility of their forgeries.
U.S. Customs and Border Patrol seized a total of 22,953 vaccination cards in 2021 and have already seized more than 7,000 in 2022.
Library of Congress opens COVID collection to the public
My friend Jim Sweeney, who knows a good story when he sees it, shared a link to the Library of Congress’ new COVID-19 research collection, which is open to the public. The Library of Congress began collecting published materials long before we realized what the pandemic might mean to us today. The Library of Congress says its collection includes captures from Facebook, The White House and far beyond.
“We didn’t know anything about COVID-19 when the pandemic began, but at the Library of Congress, we did know how historical pandemics are researched,” said Jennifer Harbster, head of the Library’s Science Reference Section. “We may not know exactly what future historians will be looking for when they tell the story of these remarkable years, but by looking at our materials from the Influenza of 1918 and broadening our scope to include areas beyond science like, policy, the arts, and social content, we hope to present a collection that will serve future researchers.”
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