Wyatt Anderson: Thank you for joining us today, Timmy. We're here to discuss the recent economic forecasts, particularly the June CPI numbers, and how certain unexpected factors have significantly swayed them. To start, could you walk us through the initial forecast for the June CPI headline number versus what was actually reported?

Timmy Cai: Absolutely, Wyatt. Our CPI first forecast current model had predicted a +0.2% MoM for the headline June number. However, the actual figure that came in was +0.3% MoM. So, there was a noticeable difference there.

Wyatt Anderson: That's quite a deviation. Drilling down into the specifics, was there any particular category that stood out as being significantly off from your forecast?

Timmy Cai: Yes, definitely. The gasoline category in our first forecast model was notably off. We had forecasted a -0.38% change, but the actual came in at a +1%. That's a substantial swing for a single category.

Wyatt Anderson: That's a significant difference. What contributed to such a large discrepancy specifically in gasoline prices?

Timmy Cai: Well, there's a straightforward reason for the gasoline discrepancy. Our CPI first forecast typically only captures the first three weeks of the month. What happened was that gas prices increased during the last week of June, which our forecast, by its very nature, didn't fully capture. So, in that sense, it makes sense why our initial reading was lower than the actual.

Wyatt Anderson: That explains the timing issue. But beyond just the timing of data capture, I understand there was a more significant, unforeseen event that played a crucial role. Could you elaborate on that?

Timmy Cai: You're absolutely right, Wyatt. This is where the unexpected geopolitical element comes into play. We released our forecast for June on June 17th. Just a few days later, on June 21st, the US bombed Iran. This event immediately caused a temporary spike in energy prices.

Wyatt Anderson: That's a critical point. So, a geopolitical event that occurred after your forecast was released directly impacted the outcome. How does your model, or any economic forecasting model for that matter, deal with such unpredictable occurrences?

Timmy Cai: This is precisely the challenge. The core issue is that our model, or any current economic forecast model, is inherently unable to predict such unexpected geopolitical events. They operate on historical data and trends, not future political or military actions. Because we couldn't foresee the bombing, and it directly led to an increase in energy prices, this specific geopolitical event became the main source of error in our forecast this month.

Wyatt Anderson: That makes perfect sense. It highlights the limitations of even the most sophisticated models when faced with truly unforeseen events. Can you explain the broader impact this event had on energy prices and subsequently on the overall CPI reading?

Timmy Cai: Certainly. It caused a significant shift. Before the June 21st event, the percentage change in energy prices for June was actually negative compared to May. We were trending down. However, after the bombing, energy prices' percentage change shifted dramatically from negative to positive. This sudden positive movement in energy prices directly contributed to the higher CPI reading that we observed. It turned what was likely to be a lower energy contribution into a positive one.

Wyatt Anderson: Fascinating how quickly a single event can reverse a trend. Now, looking beyond that immediate impact, what has been the trajectory of gas prices since that June 21st event? Have they remained elevated, or have they adjusted?

Timmy Cai: It's an important distinction between a temporary spike and a sustained increase. The sources indicate that since the event, gas prices have actually gone down to previous levels. Furthermore, if you compare current gas prices to previous summers, they remain very low. So, while the geopolitical event caused an immediate, sharp but temporary upward movement, the longer-term trend and comparison to historical context show a return to lower levels.

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