Today's Scoop:

Hey friends, don’t miss the big shift from BP today.

Here’s what you need to know…

1. Inflation picked up in August, mostly because of higher gas prices.

2. Our paychecks are secretly shrinking.

3. Child poverty doubled in the US last year after pandemic assistance ended.

S&P 500: 4,467.44
1Mo: -1% | 1Yr: +13% | 5Yr: +54%

The market hovered near flat today as investors debated the mixed news from the August inflation report.

Inflation picked up in August. The Bureau of Labor Statistics’ Consumer Price Index rose 0.6% in July, the fastest monthly jump this year. [🤓] More than half of the increase in living expenses came from higher energy costs. Gasoline prices soared by over 10% in the month. Overall, the average cost of stuff we spend money on is still roughly 3.7% higher than it was a year ago. Besides energy, the jump in inflation was driven mainly by rent and shelter costs, which might be overstated. Government home pricing statistics are always a little stale and funky. More real-time indicators have shown home prices rising slowly or decreasing in many areas.

Salaries aren’t keeping up with rising living costs. The Labor Department reported real average hourly earnings decreased by 0.5% in August when adjusting for inflation. Wages had been making a comeback for a few months, but they have a long way to go.

Child poverty is getting much worse. The Census Bureau reported the percentage of kids under age 18 living in poverty rose from 5.2% in 2021 to 12.4% in 2022. One of the most significant contributors was Congress’ decision to discontinue a pandemic-era increase of the family tax credit per child from $2,000 to $3,600. The number of children living in poverty more than doubled from 3.8 million in 2021 to 9 million last year.

Click to dig in & vote your reaction, see how others feel

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What is 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.

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 okay. Low inflation (~1-2% per year) is standard and almost unnoticeable. High inflation, like we've seen this past year, with prices of essential goods going up nearly 5-10% per year, is a problem. It's unmanageable, especially if our incomes aren't rising in tandem.

Policymakers have been raising interest rates to slow economic activity and cool spending so prices stop rising so quickly.

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