The cost of everything feels too damn high, and now you have the numbers to prove it: Surging energy prices drove inflation to a three-year high in April, the Bureau of Labor Statistics reported yesterday, marking the first time since 2023 that the cost of living has outpaced average paycheck growth in the US.

Top line: Annual wage growth slowed to 3.6% last month, while year-over-year inflation hit 3.8%—up from 3.3% in March and 2.4% in February (before the US and Israel struck Iran). In April:

• More than 40% of inflation’s month-to-month increase came from energy prices, which were up ~18% from the same time last year. Prices at the pump continued to rise, but at a slower rate than in March.
• Food inflation also contributed, with the price of fresh produce—often transported via diesel trucks—hitting its highest monthly increase since 2010. Tomato prices alone surged 15% for the second month in a row, in part because of tariffs on Mexico.

Even without those volatile categories, core CPI still hit 2.8% last month, well above the Fed’s 2% goal. This was buoyed by higher airfares, streaming services like Netflix raising prices, and a one-time adjustment in rental costs stemming from the data blackout of last year’s government shutdown.

“Inflation is eating up all wage gains,” a chief economist at Navy Federal Credit Union told CNBC. “This is a setback for middle-class and lower-income households and they know it.” In a recent CNN poll:

• Nearly three-quarters of respondents said economic conditions are poor right now.
• “Uncertainty” and “stress” were the most common words Americans used to describe their financial futures.

Looking ahead…though incoming Fed chair Kevin Warsh has generally called for lower interest rates, the latest inflation data made traders more bullish on a rate hike by the end of the year.—ML

Sam Altman testified in the trial over OpenAI’s future. The OpenAI CEO took the stand yesterday to answer questions about the history of the company, its founding mission as a nonprofit, and—juiciest of all—his dealings with Elon Musk, who co-founded OpenAI before leaving in 2017. Altman testified that he was “extremely uncomfortable” with Musk’s “hair-raising” demand to have total control over the company’s for-profit arm and to pass it onto his children when he died. Altman also said Musk’s management style “demotivated” employees and that his departure was a “morale boost” for the company. “I don’t think Mr. Musk understood how to run a good research lab,” Altman said. Musk testified last month in the weekslong trial, accusing Altman of “stealing” OpenAI’s nonprofit division.

Senate confirmed Kevin Warsh as a Fed governor, with chair vote to come. In a 51–45 vote mostly along party lines, Kevin Warsh, President Trump’s nominee to replace Jerome Powell as Federal Reserve chair, was approved by the Senate to sit on the Fed’s board of governors. That means he’s now cleared to receive a vote to become the Fed chair, which is expected today. If Warsh is named chair (which is all but guaranteed), he’ll assume the post this Friday, taking over for Powell. JPow isn’t going anywhere, however: His term as a governor doesn’t end until 2028, and he’s said he intends to stay put on the board until a federal investigation into his handling of the Fed building’s renovation ends.

EBay rejected GameStop’s $56 billion takeover bid. Taking a page out of the Mean Girls burn book, the e-commerce company rejected GameStop’s unsolicited offer, calling it “neither credible nor attractive.” Last week, GameStop CEO Ryan Cohen announced he made the longshot bid, arguing he could make eBay operate “a lot more efficiently.” But Cohen struggled to explain to CNBC how GameStop—which only has about $9 billion in cash on hand—would pay for the acquisition.—AE

A type of inflation unrelated to the price of a Dunkin’ coffee is on the ballot at that one school “in Boston.” A Harvard faculty committee began a weeklong vote yesterday on whether to cap the number of A’s allowed per course in a bid to combat grade inflation.

The measure would limit professors to giving A grades to just a fifth of the class, plus four extra students. A rule that would tie honors to class rank instead of GPA is also on the ballot.

Make A’s great again

The proposed changes come as some faculty and external critics—including the Trump administration—say that A’s becoming more common than nepo babies on Ivy League campuses eroded the grade’s value as a marker of excellence.

• A’s accounted for 60% of grades awarded to Harvard undergrads last year, compared with 25% in 2005.
• Last year, 55 Harvard students tied for the school’s top GPA award, an honor that used to be clinched by one or two students per year.

Proponents of A austerity say it’ll motivate students to work harder, while making it easier for employers and grad schools to gauge their performance. But many undergrads and some faculty oppose mandated A scarcity, claiming it’ll pit classmates against each other and hurt Harvard students’ competitiveness.

Big picture: Supporters hope a grading overhaul at Harvard will spur other top schools to curb grade inflation.—SK

You’ll never be free from the summer you mainlined the Hamilton soundtrack. As part of its 20th anniversary, Spotify introduced a new Wrapped-style nostalgia tour yesterday that allows users to go back to the day they first made an account.

“Party of the year(s)” is a limited-time feature that spits out a playlist of the 120 songs that you have listened to the most (and how many times you’ve listened to each) since you first made a Spotify account. It also shows you the first song you ever listened to on the app, the total number of unique songs played, and your most-listened-to artist.

The feature may have been a little too popular, because Spotify went down for thousands of users for a portion of the day.

New features galore. The walk down memory lane is just the latest among a slew of new gizmos Spotify has been releasing like it’s running out of time, or at least to help recruit listeners who might be turned away by the company’s latest price hikes. Recently, Spotify has TikTok-ified its app, rolled in-app messaging, and even invented its own font.

If it ain’t broke, don’t fix it. Users absolutely love Wrapped: Last year, a record 300 million users logged on to see their annual wrap-up, and to discover their “listening age.” However, Spotify’s 2024 Wrapped received some pushback from users for leaning too far into AI. Last year’s version roared back to popularity with more human touches.—MM

On Wednesdays, the Brew’s Sam Klebanov highlights a fascinating stock, commodity, or other asset that’s worth your attention.

Not everyone is rooting for America’s computer chip comeback kid. Short sellers are betting that the AI-powered stock rally of Intel—whose shares have nearly tripled since the start of the year—is about to run out of steam.

Intel soared 25% last week on reports of a deal that would see it supply chips for Apple gadgets, continuing a tear that started when the US government bought a stake in it last year. Short sellers are wagering the boom will soon end in a bust:

• Some analysts think Intel’s rally might be driven by herd mentality: “At some point, the momentum’s going to stall,” one naysayer told Bloomberg.
• The stock price might only be justified if its revenue grows at an explosive pace. It’s trading at 100 times its projected earnings per share for the year vs. Nvidia’s 24x.

However…betting against a stock that’s on a roll is highly risky, as no one truly knows how long its bull run will last. Especially when, as some analysts have noted, the stock’s price might be divorced from the company’s financial performance in the first place.—SK