📚 Econ crash course

Plus: Price pressures | Wednesday, February 16, 2022

Open in app View in browser     Axios Markets By Emily Peck and Matt Phillips ·Feb 16, 2022 😎 Well, hi! Another day in the bizarre pandemic-era economy beckons. As Emily points out below, that means there's lots to learn. Also, inflation news, Senate hijinks on Fed nominees and more! 🔮 Join Axios virtually at our inaugural What's Next Summit on April 5. Register to attend sessions on trends that will revolutionize our future. Today's Smart Brevity: 970 words, 4 minutes.     1 big thing: Real-life econ lessons Illustration: Sarah Grillo/Axios   "Future expectations" — buying more now, for instance, if you expect shortages later — used to be tough for Morgan Taylor, an economics professor at the University of Georgia in Athens, to teach her classes, Emily writes. Then came the great toilet paper rush of 2020. We all hoarded TP, expecting supply to run out. These days, students get the idea pretty easily. Why it matters: The weirdness of the pandemic economy provides "fabulous examples," for econ professors around the country, Taylor and other professors told me. The material all of a sudden feels "relevant and fresh." Students can use what they learn to explain to friends what's happening with rising prices, various shortages, and, of course, the job market — which they'll soon be entering. With more students back in person, professors say they're feeling a new urgency from them to learn, less palpable during remote school. Details: The other day, Darin Wohlgemuth was teaching the concept of substitutes in his Principles of Microeconomics class at Iowa State, using his go-to example: If there isn't Coke, you can turn to Pepsi. Then he mentioned computer chips: What do you do if you get all your chips from one supplier? "That's a really big problem in Michigan," one student called out, referring to the chip shortage facing the auto industry (and driving up the price of cars). "That was a fun connection," Wohlgemuth said. Hand sanitizer also keeps coming up in classrooms. Wohlgemuth shows students a photo he snapped at Aldi's of the price crossed out on a bottle of the once-hot product. In Paul Graf's classes at Indiana University in Bloomington, students talk about how tech is replacing labor, as they order food in restaurants from kiosks instead of waiters. "I always tell students, it's a great time to be learning economics," Graf said. Younger kids are learning supply and demand in a way that hits home: via Girl Scout cookie shortages. A troop leader in New York is giving her 10-and 11-year-olds inflation lessons, the WSJ reported last week. Yes, but: "It's boring," one fifth-grader told the newspaper. The bottom line: We're all trying to make sense of the world. And economics, maybe once seen as somewhat esoteric by younger folks, is getting a fresh look. "It's been a rough couple of years, one of the things that helps us cope is sense-making," said Justin Wolfers, a leading economics professor at the University of Michigan. "Economics certainly helps you understand the broader forces shaping your life."     2. Catch up quick ⚠️ NATO, U.S. remain skeptical over Russian pullback in Ukraine. (Reuters) 💰Global watchdog warns that crypto poses risks to global financial stability, urges regulation. (FT) 📺 How sexual assault allegations rocked CNN leadership. (NYT) 🪆U.S. accuses blogger Zero Hedge of publishing Russian propaganda. The website denied those claims. (AP)     3. Charted: Pipeline pressures Data: U.S. Bureau of Labor Statistics via FactSet; Chart: Axios Visuals Cost pressures keep building, according to new data on wholesale prices, Matt writes. Driving the news: The Producer Price Index, which measures prices before they reach consumers, surged in January, rising 1% from the prior month. Economists thought it would be up just 0.5%. Year-over-year prices were up 9.7%, down slightly from 9.8% in December. Wholesale prices typically filter through to consumers over subsequent months. In other words, inflation likely won't ease any time soon.     A message from Axios Start demanding more from your news     What's new: Axios Pro is here, with deeper reporting and analysis as fast as you need it. Who it's for: If you care about VC, PE, M&A, IPOs, SPACs, or just need the latest industry insider scoops, Axios Pro is for you. Start your free trial, or learn more about our corporate subscriptions.     4. Fed limbo Sarah Bloom Raskin and Sen. Pat Toomey. Photo: Ken Cedeno-Pool/Getty Images   Leadership on the Federal Reserve's policy-setting committee remains in limbo, just as it's set to begin one of the most consequential eras of monetary tightening in its history, Axios' Neil Irwin writes. Driving the news: In an effort to hold up the confirmation of Sarah Bloom Raskin as the Fed's top bank regulator, Republican members of the Senate Banking Committee boycotted yesterday's vote to advance five Biden nominees to lead the Federal Reserve — denying the panel a quorum. Why it matters: Raskin has become the focal point for conservatives' efforts to prevent Biden from filling out powerful Fed leadership positions. Now, controversies involving Raskin are poised to slow confirmation of other nominees, including a second term for chair Jerome Powell. State of play: Senator Pat Toomey (R-Pa.), the ranking member of the committee, said he and fellow Republicans are willing to allow a vote on nominees they may oppose on ideological grounds, including Lisa Cook, but that they will not give the committee a quorum for those votes unless Raskin's vote is delayed. They're demanding that Raskin answer more questions about her board service for a financial technology company before the committee holds a vote. (Go deeper.) More broadly, conservatives oppose Raskin because of past comments and writings arguing that financial regulators should use their powers to address climate change. The bottom line: The ball is now in Democrats' court. They can either move the four non-Raskin nominees quickly or slow down and leave vacant seats on the Fed for longer.   Share Axios and earn rewards If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. Be a good friend and share   5. Citi's board looks different than other banks' Citi CEO Jane Fraser. Photo: Chip Somodevilla/Getty Images   More than half the members of Citigroup's board of directors are women, at a time when overall female board representation is stalling out at a lower share, Emily writes. Not coincidentally, Citi is the only major U.S. bank with a woman CEO, Jane Fraser. State of play: Women make up about three in 10 directors at the financial institutions in the S&P 500 banks index. Investors are apparently OK with that, Bloomberg's Jeff Green reports. BlackRock said late last year that boards should be 30% women and minorities. Background: Citi's effort to get more women on its board was quite deliberate and began under former chairman Michael O'Neill; that effort extended to its C-suite and helped position Fraser to take the helm. Between the lines: Since the racial justice protests of 2020, boards have focused even more on recruiting non-white directors. "A 50-50 men and women board really is not that diverse if all of the board members are white," Stefanie Johnson, a professor at the Leeds School of Business who researches board diversity, tells Axios.     A message from Axios Start demanding more from your news     What's new: Axios Pro is here, with deeper reporting and analysis as fast as you need it. Who it's for: If you care about VC, PE, M&A, IPOs, SPACs, or just need the latest industry insider scoops, Axios Pro is for you. Start your free trial, or learn more about our corporate subscriptions.   Like this email style and format? Bring the strength of Smart Brevity® to your team — more effective communications, powered by Axios HQ.   Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Suite 1300, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. 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