a I s A c c E F F F I M N Today News+ Shared with You Saved Stories History COVID-19 Winter Games Black History Month Business Politics Stock Markets Apple Celebrities Consumer Electronics Entertainm Fashion Finance Food iPhone Music NFL Football THE VlllLL STREET JOURNAL. T ere's a saying on Wall Street that the stock market is also a market of stocks: an aggrega- tion of many components often moving to then own beat. Similarly, the consumerprice index is also an index of prices. Ination is both the result of total spending running ahead of the economy's capacity to supply goods and services (macroeconomics), and idiosyncratic behavior in one industry or another (microeeonomics) Whether , ' ,the i. ' ,, mostly because of macroeconomics or microeconomics might be todav ost pressing economic question. Lately seine Democrats have leaned hard into the microeconomic explanation, while adding a moralistic overlay. Annual change in prices and wages \"Market concentration has allowed giant corporations to hide behind claims of in, I Median CPI l Total CPI I Average Hourly Earnings creased costs to fatten their prot margins," Sen. Elizabeth Warren of Massachusetts said 100% Tuesday at a hearing on Jerome Powell's nomination to a second term as Federal Re- 75 serve chairman. President Biden last week 5.0 i . , i i7 ii i i for Why meat prices have risen so much. \"These companies can use their posi tion as middlemen to overcharge grocery stores and, ultimately, families,\" he said, an- nouncing initiatives to boost independent - - . - - - - . - - - - . - , - 2008 .10 .15 .20 meat pi ocessmg. Source. Federal Reserve Bank ofCleveland (median K THE WALL STREET JOURNAL. Source: Federal Reserve Bank of Cleveland (median Q Search consumer price index); Labor Department (total CPI, White House officials don't claim, as some average hourly earnings) critics suggest, that businesses suddenly got Apple News more greedy or concentrated in the last two Today years. Rather, they argue that because of the widely documented, decadeslong trend toward News+ consolidation, companies could raise prices more when the pandemic came along, disrupt- Shared with You ing supply. Saved Stories History In textbook models, prices and profits are higher in monopolistic than competitive indus- Special Coverage tries. They are less clear on whether prices rise faster in such conditions, and thus con- COVID-19 tribute to inflation. In theory, it is possible, according to economists Steven Salop of George- Winter Games town University and Fiona Scott Morton of Yale University. "If scale economies lead to BHM Black History Month mergers and associated plant or logistical consolidation for each firm, then the risk of dis- Following ruption-e.g., epidemic, earthquake, or nuclear power plant meltdown-will lead to a larger Suggested by Siri cost and price impact than if there were more diversity," they wrote in a 2020 paper. B Business P Politics A White House official said pandemic-related demand has gone up for beef, poultry and S Stock Markets eggs, but prices have risen more for beef and poultry than eggs because "eggs are a much A Apple less concentrated sector." He said a cyberattack last year on meatpacker JBS SA that took a c Celebrities significant share of the country's meat supply offline is "proof of the danger of concentra- C Consumer Electronics tion." (The North American Meat Institute says meat and poultry processors are facing the E Entertainment same pressures as the rest of the economy: increased energy costs, labor shortages and F Fashion transportation challenges.) F Finance F Food iPhone M Music N NFL FootballK THE WALL STREET JOURNAL. G LULL. Q Search same pressures as the rest of the economy: increased energy costs, labor shortages and transportation challenges.) Apple News Today News+ Shared with You Saved Stories History Special Coverage COVID-19 Winter Games BHM Black History Month DMCU Following Suggested by Siri SALE B Business P Politics S Stock Markets A Apple c Celebrities C Consumer Electronics E Entertainment Pre-owned vehicles for sale at a dealership in Detroit on Tuesday. Credit: MATTHEW HATCHER/BLOOMBERG NEWS F Fashion White House officials say they are making a limited case about concentration's contribution F Finance to inflation. They don't, for example, blame higher car prices on a lack of competition. They F Food don't endorse calls by some on the left for price controls. They have respected the Federal iPhone Reserve's independence. M Music N NFL Football But nor do they buy the argument that inflation has risen mostly because of excessive de- mand, fueled in part by Mr. Biden's $1.9 trillion American Rescue Plan, and thus can only be solved by tamping down demand with tighter monetary or fiscal policy