All I Want for Christmas Is My 2% Inflation

This is a short snippet of Bloomberg Opinion Today, a seasonal ritual of Bloomberg Opinion’s opinions, by Jessica Karl . To get the full version of this newsletter in your inbox daily, sign up here.

Today’s Must Reads

• What’s driving the economy? All that anger.
• Who’s paying for the climate? Call a banker.
• How to win the 2024 election? Be an anchor.
• How to keep peace in Gaza? Ease the rancor.

It’s Giving Season

Is it just me, or does it feel like everyone — except government employees in Wisconsin — is trying to get their hands on the viral Home Depot Christmas tree with color-changing LEDs? Overnight, giant-sized nutcrackers replaced the plastic skeletons on our doorsteps. Advent calendars featuring everything from cheddar cheese to cherry jam to potato chips are flying off the shelves. And your inbox is probably filled to the brim with suggestions for the perfect present, as evidenced by the 3.7 billion Google results for “gift guide” (note: as of 4:28 p.m.). That’s why John Authers isn't waiting for the end of the year to make his predictions for 2024. “The whole exercise is a tad silly,” he writes, but it’s still “a seasonal ritual that serves a purpose.”

Hopefully the ritual will go better than it did last year, when economists predicted that the US was 100% going to enter a recession within a year, which absolutely did not happen. As it turns out, Betsey Stevenson says, the big economic story of 2023 was the disconnect between consumer sentiment and behavior. Although millions of Americans are down about the economy, they’re still buying $499 Christmas trees and $249 animated nutcrackers.

“Economists tend to believe actions over words,” she writes. So if you’re someone who’s saying “Bah humbug! The economy is awful!” but you’re shelling out hundreds of dollars to attend Mickey's Very Merry Christmas Party at Walt Disney World, economists are gonna trust your vacation plans over your economic trash-talking. A big part of this disconnect boils down to a concept called “money illusion,” she explains: “People love to wax nostalgic about the good old days when everything was cheaper. Of course, wages were a lot lower back then, too — but people rarely wax nostalgic about that.”

Consider SAG-AFTRA’s recent union victory. The 118-day strike resulted in a $1 billion deal which will enable the actors to be paid more for their work. It’s a welcome win for Hollywood, but “customers will be left footing the bill — via those frequent subscription fee increases — without getting more for it,” Paul Hardart warns.

Normal people (the ones without Bloomberg subscriptions, I mean) tend to see the economy through the lens of their purchases. They’re focused on the price increases of their Netflix and Hulu subscriptions, not CPI figures or wage gains. Tangible evidence of “shrinkflation,” whether it be the cookie-to-cream ratio in Oreos or the amount of cake mix in a Betty Crocker box, only adds to the deep-seated belief that the economy is rigged. “This anger — mixed with the real pain of inflation and the frustrations borne out of cognitive bias and partisan politics — has created a toxic stew,” Betsey argues. If that’s the nightmare before Christmas, I can only imagine what horrors are to come after it.

CPI Day Livestream: Tomorrow morning, join Jonathan Levin , Claudia Sahm and Gina Martin Adams as they break down the latest inflation data.

Telltale Charts

Over the weekend I learned that Gen Zers are saying “luh calm fit.” It’s used to describe an understated outfit that’s stylish and substantive, but not screaming at you. It got me thinking about the value of tranquility in increasingly noisy times. What if we took the principles behind luh calm fit and applied them to presidential candidates? Neither Biden’s gimmicks nor Trump’s brashness would meet the list of qualifications. But is it so much to ask for a high-quality candidate who isn’t all up in our faces? As it stands, Matthew Yglesias notes that a plurality of voters see Biden and his party as too liberal, and Trump and his as too conservative. What we need is a president that’s “nun too crazy,” as the kids say. With a few tweaks to his campaign — focusing on more moderate policy achievements, for instance — Biden can be that person.

Further Reading

Each year, US retirement savers are getting ripped off by as much as $5 billion. — Bloomberg’s editorial board

America’s elite universities love to preach inclusivity, but their reputations depend on being selective. — Tyler Cowen

A nation of homeowners? The UK has a muddled concept of property ownership. — Merryn Somerset Webb

Link’s androgynous, silent identity in Zelda will be a challenge for Nintendo. — Natalie Schriefer

There’s a price to earning a big return on your cash: the broader economy. — Paul Davies

Seventy years ago, the West helped South Korea recover from war. Ukraine’s reconstruction can work similarly. — Admiral James Stavridis

Now that we know Wegovy is a “game changer,” obesity drugs are bound to become more accessible. — Lisa Jarvis

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Notes: Please send good soup and feedback to Jessica Karl at [email protected].

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.