Inflation's heading in the wrong direction

Summary

Marketplace Morning Report — “Inflation’s heading in the wrong direction” Date: May 28, 2026
Host: Novasafa (Marketplace)
Featured Guests: Diane Swonk (KPMG Chief Economist), Faith Parham (American Farm Bureau Federation Economist)

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Episode Overview

This concise episode explores the troubling reversal in U.S. inflation trends, examines the Federal Reserve’s response, investigates the impact of the ongoing war in Iran on American farmers, and highlights new data on CEO compensation disparities. Over roughly ten minutes, listeners get expert insights on economic pressures affecting consumers, food producers, and the workplace.

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Key Discussion Points & Insights

1. Inflation Heats Up Again

• [01:00] The latest inflation numbers, measured using the Federal Reserve’s preferred metric (Personal Consumption Expenditures Price Index) for April, show annual inflation at 3.8%, up from 3.5% in March, signaling renewed upward pressure.
  • Core prices (excluding food and energy) also increased by 3.3%, suggesting persistent underlying inflation.
  • The episode promptly dives into what this means for consumers and policymakers.

In-Depth Analysis with Diane Swonk (KPMG)

• [01:41] Swonk emphasizes two factors intensifying inflation:
  • Surging energy prices eating away at consumer budgets.
  • “Very sticky” core services inflation, which remains more than a full percentage point above pre-pandemic (2019) levels.
• Swonk explains, “The important point is this is one of the reasons that the Federal Reserve has seen a major shift and how people within the Fed are viewing their next move on rates. It’s more likely to be up now instead of down.” (Diane Swonk, 01:41)
• The Fed’s 2% target for inflation is drifting further out of reach.

Fed’s Stance on Inflation vs. Job Market

• [02:27] Key Federal Reserve policymakers (Philip Jefferson, Lisa Cook, Austan Goolsbee) have publicly stated they are now more concerned about inflation than unemployment.
• Swonk warns about the dangers of entrenched inflation expectations:
  • “They’re really worried about how much inflation is becoming entrenched in our mindset and it’s sort of becoming part of our muscle memory that creates its own vicious cycle of inflation. That’s… what caused much of the problems we saw of stagflation in the 1970s.” (Diane Swonk, 02:50)

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2. The War in Iran and the Strained U.S. Farm Economy

• [06:03] Host Novasafa shifts focus to the agricultural sector, reporting that the war in Iran and the closure of the Strait of Hormuz have disrupted global shipments of fuel and fertilizer, further raising costs for American farmers already grappling with tariffs and extreme weather.

Conversation with Faith Parham (American Farm Bureau Federation)

• [06:53] Early surveys suggest:
  • Roughly 70% of U.S. farmers said they can't afford all required fertilizer and expect to either cut back on acreage or reduce fertilizer application.
  • Farmers are turning to advanced soil testing and more precise fertilizer applications.
  • While U.S. farmers may be able to mostly adapt for the current year, outcomes for yield and income aren’t yet clear, and global markets—particularly in countries more dependent on Middle Eastern fertilizer—could see larger impacts.
• [08:17] On whether higher food prices will offset rising costs:
  • “We are on the fourth consecutive years of losses in the farm economy. We have, you know, rice producers losing more than $400 an acre... any disruption or any higher production expenses is going to make that worse for them. And so we may need additional economic assistance to help stabilize that farm economy as we continue to see those high production expenses with those pretty low commodity costs.” (Faith Parham, 08:17)

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3. CEO Compensation and Pay Gap

• [09:15] New AP survey reveals the CEO-worker pay gap grew in 2025:
  • Elon Musk (Tesla): $132 billion in stock—by far the highest paid CEO.
  • Shank Mitra (Welltower): $800 million, second highest.
  • CEOs overall made about 200 times the median worker’s salary.

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Notable Quotes & Memorable Moments

• Diane Swonk on Fed’s Policy Shift (01:41):
  “This is one of the reasons that the Federal Reserve has seen a major shift and how people within the Fed are viewing their next move on rates. It’s more likely to be up now instead of down.”
• Swonk on Risks of Entrenched Inflation (02:50):
  “They’re really worried about how much inflation is becoming entrenched in our mindset and it’s sort of becoming part of our muscle memory that creates its own vicious cycle... that’s what caused much of the problems we saw of stagflation in the 1970s.”
• Faith Parham on Farmer Losses (08:17):
  “We are on the fourth consecutive years of losses in the farm economy... any disruption or any higher production expenses is going to make that worse for them.”
• Novasafa on CEO Pay (09:15):
  “…CEOs averaged 200 times the median salary of their employees.”

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Timestamps for Key Segments

• [01:00] — New inflation data and Fed concerns, with Diane Swonk
• [02:27] — Fed policymakers’ comments on inflation vs. job market
• [06:03] — War in Iran’s impact on farms, with Faith Parham
• [08:17] — Ongoing losses in farm sector and potential for economic assistance
• [09:15] — AP survey on CEO compensation and the widening pay gap

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Summary

In this episode, Marketplace Morning Report delivers crucial updates on the worsening inflation picture and the Federal Reserve’s growing hawkishness. Through expert interviews, listeners hear how higher interest rates are likely on the horizon, why farmers are squeezed by global turmoil yet showing resilience, and how CEO pay is reaching staggering new heights compared to average worker compensation. The tone is brisk and informative, balancing economic jargon with clear explanations—and underscoring the far-reaching impacts of persistent inflation and geopolitical unrest.

Transcript

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[Novasafa (Marketplace Host)]

The latest inflation report confirms that we're heading in the wrong direction. From Marketplace, I'm novasafo. Good morning. The Federal Reserve's preferred reading on inflation, the personal consumption expenditures price index for the month of April, came out this morning. Prices are up 3.8% from a year ago. In March, it was 3.3 and a half percent. So inflation is heating up. Core prices, which show underlying inflationary pressures, rose 3.3%. For more on today's numbers, we're joined by Diane, Diane Swonk, chief economist at the audit, tax and advisory firm kpmg. Diane, good morning.

[Diane Swonk]

Good morning.

[Novasafa (Marketplace Host)]

So what's stuck out to you in today's report?

[Diane Swonk]

Well, the biggest issue for the Federal Reserve right now is not only that we're seeing the additional energy price inflation, which is eating away at consumer budgets, but we're also seeing very sticky core services inflation. That's the underlying inflation which really increased before the war in Iran, and it is running more than a full percentage point ahead of 2019 levels. And anything that is consistent with what the Fed considers price stability, which is their 2% target. That's a lot of jargon. The important point is this is one of the reasons that the Federal Reserve has seen a major shift and how people within the Fed are viewing their next move on rates. It's more likely to be up now instead of down.

[Novasafa (Marketplace Host)]

Yeah. And in fact, over the last 24 hours or so, we had Fed Chair Philip Jefferson, Governor Lisa Cook, Chicago Fed President Austan Goolsbee all saying they're more worried right now about inflation than the job market. So it sounds like this report maybe cements those concerns and kind of helps set the trajectory next for the Fed

[Diane Swonk]

exactly when you have multiple shocks. What the research post pandemic has taught us we're five years in now and no matter what the reasons are, it's the Fed's responsibility to deal with them. They're really worried about how much inflation is becoming entrenched in our mindset and it's sort of becoming part of our muscle memory that creates its own vicious cycle of inflation. That's the exact mistake you want to avoid because that is what caused much of the problems we saw of stagflation in the 1970s.

[Novasafa (Marketplace Host)]

Diane Swonk at KPMG, thank you very much.

[Diane Swonk]

Thank you.

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[Novasafa (Marketplace Host)]

the war in Iran is adding new pressure to an already strained farm economy. Before the war, farmers were under financial strain from rising costs, tariffs, and and extreme weather. The closure of the Strait of Hormuz has disrupted shipments of fuel and fertilizer and raised prices for both. For more on how farmers have been coping over the last three months, we're joined by Faith Parham. She is an economist with the American Farm Bureau Federation. Good morning.

[Faith Parham]

Good morning.

[Novasafa (Marketplace Host)]

So when the fertilizer disruptions happened because they couldn't be shipped out from the Strait of Hormuz, one of the fears was that farmers would pull way back in their plantings from acreage to how much fertilizer they use, and therefore the yields might be lower. Are there early indications now that that's actually happened?

[Faith Parham]

The American Farm Bureau did a survey to see kind of how producers were feeling. We did it earlier in the year, right after the conflict started. We asked farmers if they were planning to reduce acreage or reduce fertilizer application. And when about 70% of our farmers said that they couldn't afford all of the fertilizer they would need for the and would have to do one of those. That being said, you know, there is a science to it. So a lot of our farmers are telling us that they're doing advanced soil testings to see what their soil looks like and are going to, you know, just apply what is needed. And so we are not quite sure how yields will be affected. Right now. We think we'll still have good yields. It'll just really depend on what we see coming into the end of the season and also next crop year as well.

[Novasafa (Marketplace Host)]

So you think farmers have been able to adapt enough that there won't be a major impact on yields, at least

[Faith Parham]

this year in the United States? I think, yes, they are able to adapt. They can switch their planting to a different crop that's less nitrogen intensive, apply a little bit less fertilizer than they would like to, and reduce some of those big shifts in yields. Other countries who are more reliant on the Middle east for fertilizer will again have to wait and see how much fertilizer they were able to purchase and what their yields look like.

[Novasafa (Marketplace Host)]

If farmers are making less food, presumably they'll get better prices for what they do produce. Will that offset these higher costs? Will farmers need government assistance, for instance, in the months ahead?

[Faith Parham]

So just depending on how big the shortfall is, it could push prices high. If you remember, in 2022, when Russia and Ukraine's conflict first began, we saw really high grain prices, which did help offset some of those costs for farmers. That being said, production costs are at record highs and they've continued to increase after the pandemic. It would really depend on how big that shortfall is and how big that price goes up. What I can tell you right now is that we are on the fourth consecutive years of losses in the farm economy. We have, you know, rice producers losing more than $400 an acre. You know, all of our major row crop commodities and our specialty crop producers are losing money each year. And so any disruption or any higher production expenses is going to make that worse for them. And so we may need additional economic assistance to help stabilize that farm economy as we continue to see those high production expenses with those pretty low commodity costs.

[Novasafa (Marketplace Host)]

Faith Parham is an economist with the American Farm Bureau Federation. Thank you very much.

[Faith Parham]

Thank you.

[Novasafa (Marketplace Host)]

The Associated Press is out with its survey of CEO compensation in 2025. The highest paid? It's not even close. Elon Musk Tesla paid him $132 billion in stock. Second highest. Shank Mitra, chief executive of the healthcare real estate investment trust Welltower, paid more than $800 million. The AP says the typical worker versus CEO pay gap grew last year. CEOs averaged 200 times the median salary of their employees. I'm Novasafa with the Marketplace warning report from APM, American Public Media.

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