Prof G Markets: "Inflation Is About to Get Worse"

Date: February 17, 2026
Hosts: Ed Elson, Mark Zandi (Chief Economist, Moody’s Analytics)
Guest: Liz Hoffman (Business and Finance Editor, Semaphore)

Episode Overview

This episode dives deep into the truth behind recent U.S. inflation data, examining whether the numbers truly signal an easing of inflation or if the data masks deeper troubles. Ed Elson is joined by Mark Zandi to unravel the intricacies of recent inflation reports, the impact of government data disruptions, the stakes for Federal Reserve policy, and the everyday experiences of Americans facing persistent price rises. In the second half, Liz Hoffman analyzes the firing of the DOJ’s top antitrust enforcer, Gail Slater, dissecting the political and economic implications of fading antitrust action under the Trump administration. The show wraps with Ed’s take on the ongoing tech sell-off—particularly Amazon’s plummeting stock—and why investors are missing the bigger story behind legacy tech and AI.

Key Discussion Points & Insights

1. Inflation Data: What’s Real and What’s Not?

(02:12–15:44)

Headline vs. Reality

• Recent CPI report: Headline inflation at 2.4% YoY, slightly better than expected.
• Core inflation at 2.5%, right on target.
• Beneath the numbers: Services inflation (ex-energy) jumped 0.4%—the fastest since July.
• October 2025 data missing due to a government shutdown, distorting year-over-year figures.

"Is inflation actually cooling or is the data just wrong?" — Ed Elson (03:14)

Mark Zandi's Analysis

• The October data gap lowers reported inflation by 0.1–0.2 percentage points.
• Adjusting for the error, true inflation sits closer to 2.5-2.7%, not the stated 2.4–2.5%.
• CPI isn’t the Fed’s preferred number; the PCE deflator is. January’s PCE is expected to come in “hot”—3% YoY or higher.

“Any data are an imprecise representation of reality. ... None of them are perfect. They all have their flaws.” — Mark Zandi (07:45)

Which Number Do You Trust?

• Zandi recommends looking at multiple data points, not just one index.
• Decision-makers must weigh different measures and synthesize imperfect data.
• Base effects and seasonal adjustments can warp month-to-month or year-over-year interpretations.

“There is no satisfaction here. … You’ve got to take all these pieces of information together and make a judgment based on that imprecise representation of reality.” — Mark Zandi (08:40)

Tariffs and Everyday Experience

• Recent tariffs are being passed through directly to consumers—96% pass-through rate.
• Inflation remains stubborn, with Zandi arguing it’s about 3%, “and not getting any better.”

“I think it’s too high. … If I give you my forecast, I’d say it’s going to get a little bit worse before ultimately it will get better.” — Mark Zandi (10:26)

The Personal Inflation Rate and Quality Adjustments

• Everyone experiences inflation differently due to unique spending patterns.
• Official indexes adjust for “quality improvements,” like better cars, which can artificially lower measured inflation.

"I agree with your perception. Inflation is too high. It's uncomfortably high for most Americans." — Mark Zandi (12:45)

Looking Forward: What’s Next for Prices?

• Zandi forecasts PCE inflation may climb from 3% to as high as 3.5% by mid-year.
• Tariff pass-through isn’t finished; other pressures (like restrictive immigration affecting labor costs) remain.
• Some hope for improvement by end-of-year, with a return to closer to 2% by early 2027.

“You don’t have a business problem… you have a multiple problem. You have a valuation problem.” — Ed Elson (30:24)

2. Antitrust Enforcement Collapse: The Firing of Gail Slater

(18:55–27:53)

What Happened to Antitrust?

• Gail Slater, DOJ’s antitrust chief, was fired after resisting settlements favorable to companies with Trump-connected lobbyists.
• Her removal reflects the collapse of a so-called MAGA-populist antitrust “coalition.”
• Companies have found ways to bypass antitrust action by leveraging political connections.

“The tensions just sort of boiled over. ... Gail Slater served at the pleasure of the president and that ran out.” — Liz Hoffman (19:47)

Populists vs. Pro-Business Tensions

• Inside the Trump administration, some expected a populist crackdown on big mergers.
• In reality, pro-business forces (often with personal or cultural grievances against certain tech firms, rather than antitrust ideology) prevailed.
• Little substantive antitrust action occurred; populist hopes fizzled.

“I think the simplest explanation is that it was never real. ... It was never actually about antitrust. It was never about monopolization, it was about wokeness and censorship.” — Mark Zandi (27:34)

Absence of Enforcement

• The DOJ was not taking on anti-competitive cases at the local level, nor tackling major consolidations aggressively.
• Gail Slater, broadly respected across the antitrust field, was ultimately ousted because she didn’t comply with the administration’s political agenda.

“A plurality or a majority of people who come through [this administration] come out worse on the other side.” — Liz Hoffman (26:54)

Long-Term Consequences

• Both progressives and anti-corporate conservatives are left disillusioned.
• The episode is a sign of the diminishing role of principled antitrust enforcement amid rising political interference.

3. Tech Sell-Off & The Amazon-Anthropic Disconnect

(28:02–32:46)

Stock Carnage

• Major tech stocks: Software sector down 16% in a month; Google -7%, Microsoft -14%, Amazon -17%.
• Amazon’s losing streak is its worst since 2006.

AI Disruption Narrative

• Market rationale: Fears that new AI tools (from OpenAI, Anthropic) will make legacy tech obsolete, spurring a $2 trillion sector wipeout.

Amazon’s Hidden Value

• Amazon trades at a historically low multiple (28x earnings), far below Walmart (47x) and Costco (55x), despite higher growth.
• Wall Street overlooks Amazon’s large stake (~16–20%) in Anthropic—one of the hottest AI companies.

“The reason it is stupid is because Amazon owns nearly a fifth of Anthropic.” — Ed Elson (30:12)

A Communication Failure

• Amazon doesn’t publicize the value or terms of its Anthropic stake, leading to undervaluation.
• Ed Elson urges Amazon’s leadership to be transparent and tell the full story to shareholders.

“If you want to improve the multiple, you have to improve the story. And right now your story is missing a giant chapter that investors want to hear about.” — Ed Elson (32:22)

Wider Implications

• Microsoft, with its major stake in OpenAI, is similarly quiet.
• The tech sector’s future narrative around AI will hinge on how legacy players integrate or capitalize on emerging AI disruptors.

Notable Quotes & Moments

• On Data Reliability:
  “Any data are an imprecise representation of reality. … None of them are perfect. They all have their flaws.”
  — Mark Zandi (07:45)

• On Inflation Experience:
  “Everyone has their own inflation rate… The prices for those things [gas, coffee, beef]…they have a heavier influence on our thinking about what inflation actually is.”
  — Mark Zandi (11:50)

• On Antitrust Disillusionment:
  “The simplest explanation… is that it was never real. ... It was never actually about antitrust. It was never about monopolization, it was about wokeness and censorship.”
  — Mark Zandi (27:34)

• On Amazon’s Narrative:
  “Tell us about it. Tell us exactly what the terms are with Anthropic. Tell us exactly what your stake is.”
  — Ed Elson (31:35)

Timestamps of Key Segments

• Inflation Data Breakdown: 02:12 – 15:44
• Antitrust Enforcement Collapse: 18:55 – 27:53
• Tech Sell-Off and Amazon’s Missed Story: 28:02 – 32:46

Tone and Takeaway

Prof G Markets brings its trademark “no mercy, no malice” tone—candid, skeptical, and jargon-busting. The hosts’ banter balances technical detail (for the market-savvy) with relatable, plainspoken context. Mark Zandi’s pragmatic economic analysis grounds the inflation discussion, while Liz Hoffman lays bare the political realities driving antitrust policy. Ed Elson’s Amazon commentary is passionate and direct, calling out market narratives and urging tech leaders to fix their communication.

Takeaway: Inflation is probably stickier and higher than headline numbers suggest, and institutional trust in government data is wearing thin. Meanwhile, political interests continue to shape economic outcomes—whether in regulatory enforcement or the next generation of tech disruption. For investors and everyday listeners alike, staying alert to the real stories behind the numbers remains the key to navigating turbulent markets.