Welcome to Mind Your Business ! Consider this your weekly guide to understanding what’s happening in the worlds of economics, business and finance. By Peter Armstrong | | |  | Inflation is surging even as experts say the rise in prices is temporary. (SERSOLL/Shutterstock) | | | | |  | | There is no question, everything costs more. The issue is why and whether it's permanent. We'll get more data on Wednesday, when Canada's CPI numbers come out. | | | | | | As prices rise and consumers find they have more options in terms of spending, what happens to retail sales? They cooled last month. We get the latest figures on Friday. | | | | | | The pandemic has done wonders for streaming services like Netflix. Bored people stuck at home watch a lot of TV. We'll see how Netflix is doing when its earnings are released on Tuesday. | | | | | No, you aren’t imagining anything — it really is more expensive to buy just about anything right now. There are all kinds of reasons, sure, but none of those pointy-head explanations are much comfort when you pull out a weathered credit card.
The explanations do, however, help us understand what is happening, why it's happening and, most importantly, when we can expect inflation to cool off a bit.
U.S. inflation came in hot (again) last week. CPI was up 5.4 per cent, the fastest gain in 13 years, with energy, housing, food and vehicles all driving up costs.
In a note to clients, Claire Fan, an economist with RBC, says if you strip out some of those more volatile components, prices were only up 2.8 per cent compared to last year, and only two per cent from pre-pandemic levels.
"But global supply pressures are exceptionally acute," she wrote. "Shipping costs are high, delays are long and business input costs have surged."
Last time we got an update from Statistics Canada, inflation levels here looked like this: | | |  | | | The question for consumers, economists and policy-makers alike is not what has already happened. The key is what happens next.
We already know energy costs are soaring. And we know it's going to be a cold winter. So keep that in mind when some experts say all these price increases are "transitory."
Inflation can change how we spend. Facing higher prices, consumers may decide not to buy a product or service. They may have to defer purchases to pay for an increased bill at the gas pumps, for example.
Our spending patterns were already changing. This summer, as more and more services opened up, consumers had more options in terms of where they would spend their dollars.
To that end, we'll also get a look under the hood at Canadian retail sales on Friday. Our spending habits were already starting to change when the last batch of data was released (looking back at July). | | |  | | | Inflation is weird, though. And what people expect is going to happen can have an impact on what actually happens.
"Inflationary psychology" is the idea that consumers will spend more when they expect or believe that prices are rising.
To a certain degree, that's a good thing. You want some inflation, just not too much. Back in May, John Authers, senior editor at Bloomberg, wondered whether those expectations were starting to push CPI around.
"This does look as though inflationary psychology is being jolted back into life," he wrote in this piece. | | | | | Three things to read, watch and listen to this week | | |  | The new trailer for the Beatles documentary dropped, and it is spectacular. (Disney+) | | | 1. The Beatles still captivate and still make piles of money | | | The Beatles didn't just change music, they changed the music business in ways we still feel today.
Their manager Brian Epstein once said, "the children of the 21st century will be listening to the Beatles." Boy, was he right. And a whole new generation is about to be introduced to Ringo, Paul, George and John.
Disney’s three-part documentary series is directed and produced by Peter Jackson. A new trailer dropped this week and it's nothing short of mesmerizing.
The video opens with footage of the Beatles singing Don't Let Me Down in a sort of practice studio.
A caption comes on the screen reading, "In January 1969, a camera crew was given unprecedented access to document The Beatles at work.
"This resulted in over 57 hours of the most intimate footage ever shot of the band. The footage has been locked in a vault for half a century. Unseen... until now."
The ensuing album, Let It Be, would be the band’s last. Watching the footage is like stepping into a time machine. The band is still so young. The songs are still just ideas.
The Beatles set records, then broke them. The band made more money than anyone ever thought was possible. The rights to all their music was snatched up when singer Michael Jackson outbid Paul McCartney in 1985.
McCartney reached a confidential settlement over those rights in 2017 with Sony ATV. U.S. copyright law allows an artist to claim back their ownership interests after 61 years, so he was going to get the catalogue back eventually.
Now, McCartney, Ringo Starr and the widows of John Lennon (Yoko Ono) and George Harrison (Olivia Harrison) are all listed as producers on the Disney series.
All three parts are now set to be released in November.
But do yourself a favour and watch the trailer here. | | | 2. Canadian David Card's Nobel Prize in Economics | | | Canadian David Card won the Nobel Prize in economics last week. The shortest and simplest way of explaining his contribution to the field is that Card changed the way we think about labour issues like minimum wage and immigration.
The longer version is vastly more exciting.
Card actually took half the prize, with fellow economists Joshua Angrist and Guido Imbens taking the other half.
Justin Wolfers wrote an amazing Twitter thread after the prize was announced. Wolfers is a professor of economics at the University of Michigan, an author and host of the delightful Think Like an Economist podcast.
It’s long and well worth a read, but to summarize, Wolfers says for a long time, people made assumptions about things that were hard to actually measure.
“Then David, Josh and Guido said: Hang on,” Wolfers wrote. “Their response wasn't the usual destructive 'we can't make causal claims' stuff, but rather entirely constructive: Here's a toolkit and set of approaches to help you make credible causal claims.”
They found ways of looking at “natural experiments” to glean real-world data. The academy said the three have “completely reshaped empirical work in the economic sciences.”
In an interview with David Common on CBC’s Power and Politics, Card laughed when asked how much a Nobel Prize will change his life and his work.
“I don’t think too much will change,” he said. “The interviews will come and go and the email will subside and I’ll be back where I was.”
That afternoon, he was meeting with students on a new project.
You can read Wolfers' full thread here (stick around for the charming photo of Card on the phone receiving the news in his housecoat).
You can watch Common’s interview here. | | | 3. Marketplace investigation into real estate agents | | | A CBC Marketplace investigation has found that some real estate agents are breaking the law by steering unwitting buyers away from low-commission homes.
When a house sells, usually, the homeowners pay a commission that is split between the buying and selling agents.
New low-fee discount brokerages have been sprouting up a lot lately. You pay $200 or so to get your house listed, but have to do all the work yourself.
That's how Joanne Petit decided to sell her home, thinking she would save about $36,000 in commissions.
The Marketplace team posed as homebuyers and asked three local real estate agents to book a showing of Petit's home. Two out of the three agents steered potential buyers away from the home.
You can read about the investigation here.
You can watch the most recent episode of Marketplace here. | | | | | How the economy looks beyond Bay Street | | | The brutal cost of COVID-19 for low-income workers | | | Canada has finally climbed out of the COVID-sized hole in the labour market. Just enough jobs were added in September to finally get employment back to where it was pre-pandemic.
We all know about the K-shaped recovery by now —namely, that there were two tracks to the recovery: wealthy, salaried employees that bounced back quickly, and lower-income workers who struggled more and for longer.
Years from now, we will look back at some of these charts and figures and be blown away by the scope and scale of the damage.
Economist and author Adam Tooze has been writing about these issues since COVID crashed into the economy back in 2020.
This chart still leaves me shaking my head: | | |  | There were so many low-income jobs lost at the height of the crisis that average hourly wages actually went up.
That may seem counter-intuitive, but think of it this way: if you eliminated all the jobs with very low wages, the jobs that were still being measured would suddenly drag the average up.
Colleague Benjamin Blum wrote a great piece this past winter that documents just how hard low-income workers were hit.
You can read his piece here.
Here's a link to Adam Tooze's latest book, Shutdown: How COVID Shook the World's Economy.
Drop me a line here and let me know. I love hearing from you. | | | That's it for this week. | | | Drop me a line anytime. Send ideas, comments, feedback and notes to peterarmstrong@cbc.ca. Problems with the newsletter? Please let me know about any typos, errors or glitches.
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