A personal finance and investing podcast on money, how it works, how to invest it and how to live without worrying about it. J. David Stein is a former Chief Investment Strategist and money manager. For close to two decades, he has been teaching individuals and institutions how to invest and handle their finances in ways that are simple to understand. More info at moneyfortherestofus.com
The Bureau of Economic Analysis (BEA) is revamping its Personal Consumption Expenditure (PCE) index methodology, with changes announced in June 2026. One significant alteration involves how portfolio management services are measured, shifting from asset manager revenue to a quantity extrapolator. This follows criticism from Federal Reserve Governor Stephen Muran in December 2025 regarding the previous method's tendency to inflate PCE figures when the stock market rose.
David Stein asserts that inflation is inherently subjective and can be 'manipulated,' explaining that government statisticians choose specific items to measure price changes. He believes that while not massively manipulated, changes are made to understate inflation, potentially impacting Social Security cost-of-living adjustments and Treasury Inflation-Protected Securities (TIPS).
David Stein discusses the historical evolution of the Consumer Price Index (CPI), noting a significant methodology change in 1996. Previously a fixed-basket measure, the CPI now incorporates factors like substitution bias (consumers switching to cheaper goods), outlet bias (shopping at lower-price stores), and quality changes. Stein suggests these adjustments should be reflected in inflation measures to represent the cost of living.
David Stein identifies the AI infrastructure buildout as a factor contributing to current inflationary pressures. He notes the high demand for building data centers and the desire of hyperscalers to spend quickly due to supply constraints in compute power.
Host David Stein explains that inflation is driven by three primary factors: the amount of money in circulation and its growth rate (primarily through bank lending and quantitative easing), the speed at which money is spent (demand intensity), and capacity constraints in the economy. He cites the post-pandemic period as an example where increased money supply and spending led to higher inflation.
