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The American Economy Just Got Another Nasty Surprise

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Inflation hit 3.7%, and your paycheck didn't keep up. Justin Wolfers digs into why it's worse than Wall Street expected. Headline inflation came in at an eye-popping 3.7% and core inflation is stuck above 2.6%. The really worrying part is prices rose 0.6% in a single month. The engine behind a lot of this is energy, up about 20% since early 2025. You can already feel the first ripples. Airfares are 20% pricier, and heating oil has jumped roughly 40%, which means a genuinely expensive winter if you heat your home with it. Meanwhile wages rose just 3% against 3.7% inflation. Justin also explains why the administration's obsession with diesel barely touches the prices you pay, and why betting markets now put the odds of a pre-election Fed rate hike at a coin-flip. By the end of the video you'll know exactly what this CPI report means for your bills, your paycheck, and your next loan. You can find today's Stata worksheet, along with worksheets from previous weeks here: https://platypuseconomics.com/stata/paycheck_vs_prices_worksheet.pdf Chapters: 0:00 The last inflation report before the election 0:51 Headline inflation at 3.7% 2:46 What cost of living really measures 3:25 Why economists watch core inflation 5:52 Energy's ripple effect on prices 7:40 A costly winter for heating oil 8:16 Why the diesel fixation misses voters 10:14 Wages falling behind prices 12:20 Fed rate hike now a coin flip Subscribe — it's the one thing on this channel whose price never rockets up: on YouTube 👉 https://youtube.com/platypuseconomics on Substack 👉 https://newsletter.platypuseconomics.com the Podcast 👉 https://platypuseconomics.com/podcast Follow on Social Media @PlatypusEconomics and @JustinWolfers

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