>> The holiday season in full
swing.
For Americans whose paychecks
have not kept pace with
inflation, it leaves little
money for extras like
entertainment, travel, or
shopping.
>> Tis the season for giftgiving
and sheer.
As the holidays approach,
inflation for many Americans is
altering how they celebrate.
In a recent survey, nearly 70%
of Americans was a concern.
They worried they would be able
to buy as much this year
compared to last.
Increases in prices have had
little impact on their finances.
For others, inflation is making
the holidays harder.
>> We are buying things now, six
month a year down the road.
They are going to get cheaper
later on.
>> I really have to be conscious
about the food prices, what we
are buying, where we are going,
how much gas we are using.
>> The increase in prices, oil,
gas, food, medical care.
Normally we would go out more
often, travel a little bit.
But right now, we tried to limit
it a little bit to save on gas
costs, anything with traveling a
lot.
>> It is not just food prices,
gas prices, utilities, it is
everything all at once.
>> I have friends that are
tradespeople.
In good times, they were
spending $100 a week on gas.
Now they are spending 150.
>> It makes me think about what
do I want to save money for,
what do I want to do in the
future?
How will I help mitigate the
impact of inflation?
>> Christmas came so fast, it is
like what are we going to -- you
want this, you need this.
It is a lot.
It is overwhelming at times.
There is a black cloud overhead.
You are afraid of what is going
to happen.
And the change of spending, what
will happen down the line, it
will get worse instead of
better.
>> I'm joined by Neil Irwin,
chief economic correspondent at
axios.
We heard from a number of people
concerned about high prices.
Is there some data showing we
may see a moderation in
inflation?
Are things getting better?
>> Good news and bad news.
Inflation seems to be starting
to slow.
Good reasons to think it will
around 2023.
Still high, so has not come
down.
Wholesale prices up 7.4%.
That was 8.1%.
7.4% inflation is really high.
It is not great news for
Americans.
>> I want to get into all of
that.
Let's take a few steps back and
remind us how we got into this
situation.
Inflation we have not seen in a
generation.
>> A lot of things converging at
once.
The biggest the pandemic really
threw the economy for a loop.
Comebacks during the pandemic,
massive stimulus out of the U.S.
Government and other world
governments, the federal reserve
keeping interest rates low for a
very long time, even as the
economy took off.
It greeted too much demand and
little supply.
A shortage of things, workers,
goods, shipping capacity,
gasoline, on the others, you
have demand stimulated and
through the roof.
A combination of too much supply
and demand, higher prices.
>> Some of the supply chain
issues when it comes to that one
factor are starting to be ironed
out.
Inflation is still high, the fed
is worried about that.
I want to take cyber Monday and
Black Friday sales and look at
that.
We saw historic sales of those
days.
Does it make sense to you, the
type of consumer behavior in the
face of what we are looking at?
>> What we have seen from
consumers is yes, inflation,
more groceries and gasoline than
a year ago.
They are dealing with it by
using the savings they
accumulated during the pandemic.
And supply chains have gotten
better.
Store shelves and inventories
look stronger than a year ago.
There are shelves if you want to
go buy, and people are taking
advantage of the pensive savings
and the stimulus checks to make
it happen.
>> The other factor, you and
your colleagues have written a
lot about this, this tight labor
market.
We have very low unemployment.
The fed has to grapple with it.
Giving you have still high
inflation, a tight job market,
and wages that have increased,
taking that into account, what
is the macroeconomic picture?
What is the greater impact of
inflation on the economy?
>> What has been happening over
the last year or so,
unemployment is low, people are
getting raises.
But inflation is higher.
If you got a 5% raise, that
is great.
When it is 8%, it does not go
quite as far.
That is the weird thing about
the labor market.
A lot of jobs out there.
Real wages actually declining.
How does it change in 2023?
Will it become less hot?
Will we see inflation come down
so people have greater
purchasing power?
That is the open question for
next year.
>> You also have the fed meeting
next week.
Speculation about whether they
will raise interest rates.
I'm sure you're watching that.
What specific ramifications will
we see if we see another
interest rate rise?
>> It looks likely what the fed
will do on Wednesday is raise
their target interest rate
another .5%.
We are getting into the mid to
high fours, higher than in many
years.
That means money is more
expensive, borrowing money is
more expensive, it is slowing
the economy, slowing growth,
lowering asset prices.
The stock market has had a rough
year.
The goal is to slow the economy
and bring inflation down.
The first part is starting to
have been, the second part,
inflation coming down is not as
clear.
>> That is related to the talk
about the big R, the potential
for recession in 2024.
How are you viewing that to the
fed's decision next week?
>> The odds of recession are
definitely higher than usual.
We can find ourselves in a
recession.
Hard to argue we are in one
right now, job growth is very
strong, but the idea we find
ourselves in recession, where
there is higher unemployment
rate, seems more likely than not
next year.
The question is how severe it
is, how widespread the pain is,
whether it is recession or not
is not the question.
Does it affect the ordinary
American in painful ways, or can
we get out of this inflationary
situation in a more measured way
that doesn't hurt so bad?
>> Everyone hopes for the latter
.
Everyone has the word you used
when it comes to the economic
picture, weird.
Thank you so much for joining
us.