May 13, 2020 - Economy & Business

Record-low consumer price index doesn't mean inflation is dead

Dion Rabouin, author of Markets
Data: Investing.com; Chart: Axios Visuals

The core consumer price index, which excludes volatile food and energy costs, fell 0.4% in April, the biggest drop in the index on record, dating back to 1957. Compared with April of last year, the core CPI rose 1.4%, the smallest annual gain since 2011.

The state of play: March's core CPI reading was also negative, marking the first back-to-back negative prints since 1982.

What it means: "Economic models, as well as lived experience, tell us that prices should be falling with demand in free-fall, and in today’s release it is clear that they are," AllianceBernstein senior economist Eric Winograd says in an email.

  • "Inflation is not the focus of the market, nor of policy-makers, for now or for the foreseeable future."

Yes, but: That may be a mistake, says BlackRock’s CIO of global fixed income Rick Rieder.

  • "There’s a danger in merely extrapolating recent trends, and we think 2020’s broad deflationary influences may well lead to higher rates of inflation next year," he says in a note to clients.
  • "We think that even a modest re-setting of oil prices over the next 18 months could drive 2021 inflation in a manner that offsets some of the declines occurring now."

Between the lines: Both Rieder and Winograd see the "monumental" policy response from the Fed and the government as likely to drive inflation well above levels currently priced in by the market, which Rieder calls "unrealistic and excessively pessimistic."

  • David Zervos, chief market strategist at Jefferies, goes further, asserting that "the extraordinary policy response to COVID-19 marks the beginning of the end of the disinflationary era in existence since the early 1980s."

Go deeper: The federal government's coronavirus response risks spiking inflation

Go deeper

The policies that could help fix policing

 Illustration: Sarah Grillo/Axios

George Floyd's death has reignited the long and frustrating push to reform a law enforcement system whose systemic flaws have been visible for years.

Why it matters: Solving these problems will require deep political, structural and cultural changes, experts and advocates say — but they also point to a handful of specific policy changes that, while not a cure, would make a difference.

16 mins ago - Health

Coronavirus diagnostic test pricing is relatively tame

A medical professional administers a coronavirus test at a drive-thru testing site run by George Washington University Hospital in Washington, D.C. Photo: Drew Angerer/Getty Images

Anecdotes of labs charging thousands of dollars for coronavirus diagnostic tests are the exception rather than the rule, according to data provided to Axios by a national health insurer.

Yes, but: Some labs that don’t contract with the insurer charged rates that are multiple times higher than what Medicare pays for the diagnostic tests, and in some scenarios, patients may be at risk of receiving surprise bills.

Trump says he will campaign against Lisa Murkowski after her support for Mattis

Trump with Barr and Meadows outside St. John's Episcopal church in Washington, D.C. on June 1. Photo: Brendan Smialowski/AFP via Getty Images

President Trump tweeted on Thursday that he would endorse "any candidate" with a pulse who runs against Sen. Lisa Murkowski (R-Alaska).

Driving the news: Murkowski said on Thursday that she supported former defense secretary James Mattis' condemnation of Trump over his response to protests in the wake of George Floyd's killing. She described Mattis' statement as "true, honest, necessary and overdue," Politico's Andrew Desiderio reports.