Who is Emily Mascitis?

Who is Emily Mascitis?

• Emily and 476 of her associates are single-handedly responsible for the inflation reported by the BLS – Bureau of Labor Statistics.

• These people literally go door to door to check prices of any number of thousands of items on the BLS checklist, the things that make up the Consumer Price Index.

  • A can of chicken noodle soup.

  • The price of a blowout. Hair that is; not the game 7 featuring the blowout of Phoenix by Dallas. Talk about inflating the score.

  • A particular piece of jewelry.

  • Charges for a cremation service. Seriously.

• Pre-pandemic, her visits were hardly noticed; now, business owners are much more vocal about the increase in their costs.

• Also observed: did the serving size shrink?

  • A bag of potato chips may have the same price, but only have 11 ounces instead of 12.

    • Along those lines, is it my imagination, or did the size of paper napkins and toilet paper shrink? They have to be about 80% the size of what they used to be.

• Who knew that when someone shows up from the government, they actually could be there to help.

• And now you know how the consumer price index is calculated.

Speaking of the Consumer Price Index (CPI) aka The Inflation Rate

• Some key numbers:

  • Total CPI increase for April year over year is at 8.3%. Lower than last month but higher than the 8.1% expected.

  • If you take out food and energy costs (more on that in a minute), inflation was still at 6.2%, higher than the 6% expectation.

    • So why take out food and energy? As commodities, they are volatile and could skew the inflation picture. When you take them out, you have the “Core CPI”.

    • And yes, the Core CPI was still higher than expected.

  • Shelter costs (rent) rose at the fastest pace, making up about 1/3 of CPI.

  • And just like we adjust for Energy and Food, we also adjust for worker’s earnings.

    • Inflation adjusted earnings fell 2.6% over the past year because of inflation.

    • Put another way, all of your workers experienced a 2.6% pay cut. That’s why they are scrambling to find the next job that pays $1 more per hour.

      • Be proactive. Increase the pay of your productive employees and help them decide to stay.

• Wholesale prices were up 11%.

  • Roughly speaking, that means the suppliers/manufacturers are still eating some of the increased costs.

  • As I’ve said before, if you are ever going to raise your prices, this is the time.

    • I think you can easily build in an 8% sale price increase in most of your products/services without a lot of pushback.

      • If your customer pushes back, I am betting they are high maintenance anyway, so raise the price for them even higher. Really.

      • They will leave you – that’s a win-win – but they may come back when the service they get doesn’t match yours. That is the definition of mixed emotions: they are paying you more, but you really don’t want to sell to them.

Bits and Pieces…

• Keep in mind IRS’s voluntary classification settlement program (VCSP).

  • Firms that have consistently treated workers as contractors and given them 1099s can come in and pay a modest fine and receive audit protection for prior years. Thereafter, the workers are treated as employees and get W-2s from their employer.

  • Economically, this is probably a pretty good deal. All you need is one of your workers talking to cousin Eddie and bragging how there are no taxes taken out of her paycheck. And it turns out Cousin Eddie just passed the bar on the third try.

• Newspaper headline: “Netflix to Workers: If You Don’t Like Our Content, Quit”. Some things just don’t need clarification.

• Same Newspaper: “The Return-to-Work Rebellion Gets Serious” followed by “Large Tech Companies Hit Pause on Hiring”.

  • According to ADP, two-thirds of the workforce said they would find a new job if required to return to the office full-time. That’s a lot.

  • On the other hand, the big tech companies (Amazon, Twitter and Uber) have paused hiring. Sounds like a game of chicken to me.

• What is going on with Crypto? Just a week or two ago, Fidelity was going to include it as an option in their 401k packages. Now, probably not so much.

  • In case you are wondering:

    • Bitcoin peaked at $67,582 November 8, 2021

    • Six months later, it is at $30,449

    • Yep, a 55% drop.

  • Crypto currency is finding out what it is like to NOT be a safe haven for cash. I refer to it as a haven for speculation. 

I would suggest accepting good old fashioned US Dollars.  That’s my business tip of the week – duh!.