Prof G Markets Hottest Inflation Report In 3 Years Has One Big Problem
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May 13, 2026 
Justin Wolfers, a University of Michigan economist who studies inflation and policy, and Stacy Rasgon, a Bernstein semiconductor analyst, join to unpack hot inflation data and a record chip-stock rally. They debate energy-driven price spikes, Fed implications, AI-fueled demand across GPUs to memory, earnings revisions, and whether semiconductor gains can last.
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Headline Inflation High But Core Shows Sticky Risk
- April CPI rose 3.8% YoY and core inflation 2.8%, showing headline pain driven heavily by energy but a still-elevated underlying trend.
- Justin Wolfers warns energy shocks can spill into broader inflation expectations, making a temporary shock persistent and costly to dislodge.
Energy Shock Is The Dominant Driver Right Now
- About 40% of April's month-to-month inflation increase came from energy, largely tied to Middle East conflict and Strait of Hormuz disruptions.
- Wolfers: if the conflict endures like Iraq/Afghanistan, energy-driven inflation could become prolonged and feed into wages and expectations.
Markets Are Down A Few Percent Because Of The War
- Equity markets mask the war's drag because multiple forces (AI boom, earnings) offset it; isolating oil's effect shows meaningful downside.
- Wolfers' back-of-envelope: a 70% oil rise × −0.9 S&P response ≈ US stocks ~5% lower due to the conflict.