Today's Scoop:

Hey friends - it’s almost Friday. Look out for our Weekly Scoop tomorrow.

Here’s what you need to know today…

1. Living costs aren’t rising as quickly anymore.

2. Airfares got cheaper last month, but dairy and meat prices climbed.

3. Layoffs jumped last week but are still pretty low.

S&P 500: 4,468.83
1Mo: +1% | 1Yr: +6% | 5Yr: +57%

The market wavered and continued its sideways pattern of the past few weeks. The July inflation report didn’t deliver any significant surprises, confirming the trend back to normal conditions.

Living costs aren’t rising as quickly anymore. The Bureau of Labor Statistics’ Consumer Price Index rose 0.2% in July, slightly lower than the rise in June. [🤓] The average cost of stuff we buy is roughly 3.2% higher than a year ago. These numbers might also be overstating reality. Rising rent and shelter costs were 90% of the CPI increase in July, but government shelter cost statistics are always a little stale and funky. More real-time indicators have shown home prices rising much more slowly or decreasing in many areas.

It’s starting to get a little cheaper to get around. Shrinking airfares, public transportation costs, and vehicle price tags were some of the most significant negative contributors to the CPI last month. Groceries got a little more expensive. Notably, prices for meat and dairy products jumped 0.5% in July. Given the uncertainty of weather and agriculture, food prices are typically more volatile.

Layoffs jumped last week but overall remain pretty low. The Labor Department reported initial unemployment claims rose to 248,000 last week, far more than economists expected. That’s a little higher than the range in 2019 but not problematic yet. US employment is still near record highs.

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• Tapestry buys Capri, merging Coach and Versace fashion empires

• Zoom might be using your video and conversations to train its AI

• Walmart and Pepsi team up to invest in regenerative agriculture

• Disney battles through media slowdown and raises streaming prices

• Home Depot commits to cutting emissions and waste

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Understanding Inflation and the Consumer Price Index (CPI)

The Consumer Price Index (CPI) is one of the main ways economists track inflation. Inflation is the rate at which things get more expensive. The CPI looks at a set basket of stuff your average consumer spends money on and tracks how much it costs each month. The rate of change is inflation.

One important thing to know: inflation is most often quoted as an annual number, like “inflation rose to 3.2% in July,” but the annual number might not always be the best reference in unusual times like the past two years. If we’re trying to understand whether living costs are still surging, the monthly rates of change are most helpful. If prices rose 0.18% from May to June and 0.17% from June to July, inflation actually declined, even if the July-22 to July-23 change is slightly higher than the June-22 to June-23 change. The annual number helps us remember the pain we’ve experienced, but monthly numbers help us understand what’s happening today.

Prices rarely go down. It's normal for things to get more expensive. You'll never be able to buy a Coke for a quarter again, but that's ok. Low inflation (~1-2% per year, 0.0-0.2% per month) is standard and almost unnoticeable. High inflation, like we saw last year, with prices of essential goods going up nearly 7-10% per year, is a problem. It's unmanageable, especially if our incomes aren't rising in tandem. Low inflation, where incomes keep up or outpace rising living costs, is the goal for economic policy, not zero or negative inflation.

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