Across regions and sectors, inflation zigs and zags

Overview

This episode dives into the complexities of inflation across U.S. regions and sectors, exploring why prices vary so widely. It also examines the impact of tariffs on businesses, the rise in long-term unemployment, and the legacy of McKissack & McKissack, the oldest Black-owned construction firm in the U.S.

Notable Quotes

- You can only eat so much of that cost. – Kayla McCoy, on the challenges of absorbing rising tariffs.

- Black excellence has always been there. It's just people haven’t seen it for what it is. – Cheryl McKissack Daniel, on the legacy of her family’s construction firm.

- When the economy goes down, high-end alcohol is one of the first things to go. – Aaron Polsky, on shifting consumer behavior during economic downturns.

📈 Inflation’s Regional and Sectoral Variations

- Inflation rates differ significantly across U.S. cities: San Diego’s inflation is at 4%, while Dallas is under 1%.

- Kristen Schwab explains that housing costs, which make up a third of the Consumer Price Index (CPI), are a major driver of these disparities.

- Tariffs on Asian imports disproportionately affect West Coast cities, while labor shortages in immigrant-dependent industries like agriculture and hospitality also push prices higher.

- Economists note that regional inflation spikes are often temporary but provide valuable insights into broader economic trends.

📦 Tariffs and Business Uncertainty

- Businesses are grappling with unpredictable tariff policies, which complicate supply chain decisions.

- Barton O’Brien of BayDog has stockpiled inventory to avoid tariffs but is running out of options as new shipments face higher costs.

- Small businesses like Town Center Music report multiple price hikes in recent months due to supply chain disruptions.

- Some companies, like Lofty, are shifting focus to international markets to escape U.S. tariff volatility.

📉 The Rise of Long-Term Unemployment

- Long-term unemployment (27+ weeks) has risen to 1.8 million people, the highest since late 2021.

- Kimberly Adams highlights how economic uncertainty and AI adoption are causing businesses to delay hiring.

- Workers like Michelle Thomas face significant challenges re-entering the workforce, often competing with new graduates for lower-quality jobs.

- Extended unemployment has broader economic consequences, including wage suppression and reduced job quality for re-employed workers.

🏗️ The Legacy of McKissack & McKissack

- CEO Cheryl McKissack Daniel shares the history of her family’s construction firm, founded in 1905 and rooted in a lineage dating back to 1790.

- The firm has contributed to iconic projects like JFK Terminal 1 and the new World Trade Center.

- McKissack emphasizes the importance of preserving Black history and excellence in the face of challenges to diversity, equity, and inclusion initiatives.

- She is optimistic about passing the business to the sixth generation, framing it as an opportunity for her daughters to build on a unique legacy.

🍹 Consumer Behavior and Niche Markets

- Aaron Polsky, founder of LiveWire Cocktails, discusses how rising costs have impacted his business, from raw materials to consumer demand.

- Polsky’s partnership with a Native American distillery helped reduce production costs and stabilize his business.

- He notes that consumers are cutting back on high-end alcohol due to rising living expenses but sees potential in offering premium products at slightly higher prices.