Wednesday Wisdom 5/20
Midweek reads full of fun facts to contemplate on inflation, job loss, bonds, and working-class art
Hello dear readers,
It has been another rough year in America this week with the president raiding the treasury to pay reparations to his insurrectionists, but I’m still here. And so are you. Let’s keep going, shall we. I brought a few fun facts and an inspirational snack.
Big News
Consumer price inflation. Headlines on inflation have amused me, but not in a fun way. One real estate industry publication cited ‘top economists’ expecting six percent inflation later this year. Meanwhile, I’m staring at this chart with trailing three-month CPI inflation at a 7.4 percent annualized pace wondering why they don’t see what I see.
Year-over-year CPI inflation is 3.8 percent, which happens to be my forecast for 2026 inflation. I probably need to revise that higher, again. Inflation over the past twelve months is lower than the pace experienced from February through April because of the war in Iran.
Core inflation. When removing the impact of food and energy prices, inflation is still far beyond the two-percent Fed target. Core CPI inflation is 2.7 percent year-over-year, and 3.2 percent annualized over the past three months. The core personal consumption expenditure (PCE) measure of inflation is trending even higher at 3.1 percent year-over-year and 4.4 percent over the past three months.
Fun Fact: PCE inflation measures the change in prices we paid for goods and services, while CPI inflation measures changes in goods and services prices.
April 2026 core inflation is rising on pass-through from tariffs and higher energy prices. Apparel price inflation has steadily accelerated in 2026 as lower cost inventories are replaced by tariffed goods. Transportation services inflation has accelerated since March as higher energy costs are passed on to customers.
So what? Inflation is set to rise as supply chain disruptions add to energy cost pressures this summer. As a result, interest rates will rise.
Under new leadership, the Fed may try to avoid rate hikes, but market-based interest rates will rise regardless. Waiting to hike would prop-up real asset values, especially institutional investments, are already way too high relative to interest rates.
Related Fun Facts Reads:
Reads Around the Web
Prepare for an AI jobs apocalypse, The Economist, May 14, 2026: “The number of AI agents has exploded. Spending on AI by businesses is up dramatically… Data centres will account for 8.5% of America’s peak power demand in 2027, up from 4.1% in 2025, predicts Goldman Sachs… As AI firms bid up the price of land and energy, the dollars people earn will go less far… state intervention, and perhaps a universal basic income, will be necessary… Concentrations of rent must be confronted early, before the power of rentiers is too great.” (🎁link)
Bank Executives’ AI Talk Takes Frightening Turn for Workers, by Matthew Boyle, Bloomberg, May 19, 2026: “Standard Chartered Plc, [CEO] Bill Winters said Tuesday he’s replacing ‘lower-value human capital’… Goldman Sachs Group Inc. President and [COO] John Waldron described his firm’s traditional operations as a ‘human assembly line’ ripe for automation… Last year, big US banks reduced staff by the most in almost a decade… In 2027, global banks could see pretax profits as much as 17% higher… after reporting a first-quarter profit of $8.16 billion fueled by strong trading, [Bank of America CEO] Moynihan said, ‘eliminating work and applying technology’ allowed the bank to shed 1,000 people through attrition.”
Is Nvidia too big to fail?, by Robin Wigglesworth, FT Alphaville, May 20, 2026: ”Nvidia has morphed from being the AI boom’s leading player to a systemically important one for the whole industry… it is a large investor in the likes of OpenAI, CoreWeave, Anthropic and xAI/SpaceX… a huge customer and supplier to many more companies in the industry, essentially recycling a lot of the money it is making back into its own business… this all means that fate of the equity market is unusually tied to the fate of not just one technology, but just one company.”
Reads on Substack
“Congress, the branch of government empowered by Section 5 of the Amendment to enforce the 14th Amendment’s guarantees, must block this blatantly unconstitutional scheme from moving forward.”
“Until now, markets have been complacent about the implications of the Iran war.”
“The choice to keep talking, plainly and often, was one of his best.”
One Last Thing…
“I’ve realized I have to be an artist. It took me a while to admit that I was an artist.”
Sara’s Fun Facts Schedule
🦉 5/27 No Wednesday Wisdom: Sara takes a break 🌞
🦉 6/3 Wednesday Wisdom: State-level Employment
☀️ 6/5 Sunshine Corner: The Fertility Rate
🦉 6/10 Wednesday Wisdom: May Employment and Inflation
“The most revolutionary thing one can do is always to proclaim loudly what is happening.” — Rosa Luxemburg
Cheers! - Sara 🦉