June 29, 2022

The Appetizer

“Everybody thought it was me. And nobody ever knew it wasn’t me, literally nobody knew.”

Billie Eilish on admitting she used a body double for part of her 2022 Coachella performance.

Now, on to the numbers. Drum roll, please …

• 6.45%: The S&P 500 advance last week.
• 35.1 mph: The speed of Chicago Cubs Frank Schwindel’s eephus pitch against the New York Yankees.
• 300,000: The number of public school teachers and staff that left the field between February 2020 and May 2022.
• $84.12: The planned per-person spending on food items for the July 4 holiday weekend.
• 37%: The percentage of consumers planning to watch fireworks/attend a community celebration, up from 24% in 2020 but down from 40% in 2019.

Dig In
Inflation Has Gone Vertical

This week, we’re going back to supply-demand basics to understand why inflation has gone vertical. Remember, two factors affect prices: the supply of a good or service and the demand for it.

Looking at services: COVID lockdowns quickly slashed demand for activities like eating out, going to the gym, and flying on a plane. In response, many businesses scaled back their services, keeping the relationship between the price factors in balance. They also kept their prices flat or lower, as they desperately searched for any sort of income to stay afloat. Remember super cheap flights in 2020? This may be why inflation initially appeared muted.

As the world reopens, pent-up demand has taken off and the war in Ukraine has constrained supply. Packed flights and booked-up rental cars show consumers splurging some of their excess savings. This would be fine … if supply kept up. Supply chain problems continue to keep rental fleets smaller, and airlines struggle to staff flights; greater demand, chasing fewer goods and services, equals higher prices – fueling inflation.

Check out this week’s Sight|Lines for a broader discussion of this topic and a path back to normal.

Weekly Specials

It’s no secret Fourth of July barbecues will be more expensive this year, but you might be surprised to learn by how much. Pork chops are up 30%, and hamburger buns up 55%. All told, you can expect to pay almost 21% more for your backyard get-together than last year … not counting the booze.

The Biden administration is calling for a three-month gas tax holiday to help consumers hurting at the pump. The federal gas tax stands at 18.4 cents for gas and 24.4 cents for diesel and would represent nearly a 4% discount on $5 per gallon gas. It’s not much, but every little bit helps.

The 2026 World Cup is coming to North America, and it appears football will be hosting football: All matches at the 11 U.S sites will be played in NFL stadiums, including Boston, Seattle, and LA. Miami nearly missed the cut after turning in a dog-ate-my-homework-type presentation. Shame, shame.

A recent Gusto survey found that nearly half of new entrepreneurs in 2021 were women, up 28% over 2019. 5.4 million businesses were created in 2021 in a reflection of the creativity the pandemic afforded some people, increased child care responsibilities, and the desire for better opportunities.

Corporate Lunch

Kellogg is splitting into three public companies, separating brands in snacking, cereal, and plant-based businesses.

Juul e-cigs are getting pulled off market by the FDA after giving insufficient or conflicting data about the risks of using their products.

Salad chain Sweetgreen said it would launch Rewards and Challenges, a program to further drive store frequency and digital sales. It’s meant to reward customers for “achieving healthy habits.”

Toyota issued a recall for its flagship electric SUV due to an issue with the wheels. What is the problem you ask? The wheels can fall off.

La-Z-Boy has been working hard and reported an earnings beat with record sales in Q4.

Russian drink producer Ochakovo is knocking off Western soda brands that pulled their products from shelves after the invasion of Ukraine. Coca-Cola is now Cool Cola, Fanta is Fancy, and Sprite was replaced by Street.