Teaching Robert Samuelson About Supply and Demand

Last week we had to teach Robert Samuelson about inflation. He noted that the wealth of households was back to its pre-recession level, but spending was not. This led him to think that the wealth effect no longer applied. However, when we adjusted the data for inflation and then brought in Mr. Arithmetic it turned out that people were spending more than would be predicted by the wealth effect, not less.

This week it looks like we have to teach Mr. Samuelson about supply and demand. His column...