Weekly Lab Report – January 29, 2026

Economic Models, “Skimpflation,” and Some Helpful Links

Fiscal Lab Notes is the official Substack page for the Fiscal Lab on Capitol Hill. You can check out all our work and analyses at fiscallab.org.

As we face a threatened government shutdown over ICE funding and as much of the Northeast grapples with historic cold and literal ice, the Fiscal Lab remains very busy.

Using Models and Theory to Understand CBO and JCT

Understanding reports from the Congressional Budget Office (CBO) or Joint Committee on Taxation (JCT) can be difficult for nonexperts, but Parker Sheppard argues it doesn’t need to be.

In his latest primer, Sheppard gives a high-level overview of what economic modeling is and how modeling is used to analyze policy changes. He defines some technical terms including elasticities, exogenous variables, endogenous variables, and parameters, and explains how these concepts fit into models. Sheppard also provides a helpful checklist of questions staffers should ask when interpreting a given report. These questions include:

· Which model was used for the analysis?

· What simplifying assumptions go into the model?

· Did CBO specify the exogenous variables (the variables a new policy changes) as Congress intended?

· How certain are the results? Does the forecast from a model have a wide range or narrow range of outcomes?

Some References and Vocab Words

For staffers and anyone else interested in the federal budget, there is a lot to know: acronyms, abbreviations, jargon, National Income and Product Accounts, and more. The Fiscal Lab has two pages on its website to help budgeteers wade through all this information. First, we have published a 700-plus term (and growing) glossary with everything from “Accounts Receivable” to “Yield Curve.”

Second, we also have a “Reference Links” page with links to regular reports and other data releases by the CBO, JCT, Bureau of Labor Statistics (BLS), Federal Reserve Bank of St. Louis (FRED), and more.

Both the Fiscal Lab Glossary and Reference Links pages are living documents and will be updated as needed to support congressional staffers and other interested audiences.

Hidden Costs of Inflation

Inflation is the rise in general prices across the economy. While rising prices are bad enough, Joseph McCormack argues that inflation often leads to “shrinkflation” and the harder to measure “skimpflation.” Shrinkflation means a good remains at the same price, but with fewer easily identifiable parts included. For example, a “box of granola bars that previously had 10 bars included may now only have eight.” Skimpflation is the degradation of a “service that cannot be easily quantified.”

McCormack argues that skimpflation, particularly in subscriptions, has become more common. For example, Tesla is moving from a one-time $8,000 purchase for its Full Self-Driving function to a $99 per month subscription. Over a Tesla’s average 15-year lifespan, that subscription equals about $17,800. Similarly, movies, TV shows, and sports have become fractured across streaming services. Now, a family may need Netflix, Amazon Prime, and other streaming services to watch what they previously largely got from a simple cable package.

To reduce the costs of inflation, including skimpflation, Congress should get to the root of the problem: too much money chasing too few goods. It can only do this by disciplining itself fiscally and by demanding sounder monetary policy by the Federal Reserve.