The Patriot Post® · Blaming Consumers for Inflation

“What’s Wrong With the Economy? It’s You, Not the Data.” That’s the obtuse title of an article in The Wall Street Journal by its chief economics commentator, Greg Ip. That provocative statement pushes the notion, which has been repeated by much of the mainstream media of late, that the economy is actually in really good shape.

So why are Americans still down on it?

Ip notes that a recent WSJ survey in swing states found that 74% of respondents said inflation moved in the wrong direction last year. “This assessment,” he responds, “which holds across all seven states, is startling, sobering — and simply not true. I’m not stating an opinion. This isn’t something on which reasonable people can disagree. If hard economic data count for anything, we can say unambiguously that inflation has moved in the right direction in the past year.”

He adds that over the last 12 months, the rate of inflationary growth has slowed to 3.2%, down from 6% the year prior. This, he observes, is good. Inflation is coming down, and yet what seems to befuddle him is that most Americans think it has gone up.

He struggles to explain this, pointing to positive economic markers over the past year, such as the stock market booming, a near-50-year-low unemployment rate, and steady GDP growth.

Then, almost as a throwaway observation, he states: “As the saying goes, you can’t eat gross domestic product, or GDP. But what you eat is part of GDP and while people have said for several years that they are cutting back on groceries and eating out, the data show that Americans as a whole are spending more on groceries and restaurant meals, after adjusting for inflation, than in 2019.”

A lot more. Yet he wonders why Americans feel bad about the economy.

Here’s where the disconnect really is. Thanks to another Journal article — published on the same day as the aforementioned story — we have the answer to Ip’s conundrum. That article is titled, “How Far $100 Goes at the Grocery Store After Five Years of Food Inflation,” with the subhead, “From beef to mayo, consumers continue to spend more to buy less.”

The second article observes, “Prices for hundreds of grocery items have increased more than 50% since 2019 as food companies raised their prices.” And why have food companies raised their prices? The short answer is inflation, as the article notes, “Executives have said that higher prices were needed to offset their own rising costs for ingredients, transportation and labor.” So, either all the food executives across the country are involved in a grand conspiracy to raise prices and then falsely blame it on inflation, or it’s actually the result of inflation.

The dollar’s value is down nearly 20% from 2019. Given that reality, the cost of all goods has risen because, especially for food, the actual value of it has not changed. People have to eat.

To put it as succinctly as possible for those in the media still scratching their heads, when people have less money in their bank accounts than they did four years ago because everything they buy costs significantly more than it used to, they see this as bad. This is especially the case for those Americans who are working paycheck to paycheck.

Furthermore, after Americans experienced years of a relatively steady rate of inflation hovering roughly around 2%, the sudden spike to 40-year highs in 2021 and continuing into 2022 hit them hard. Since the cost of goods will not be going back to pre-pandemic prices, the public’s opinion won’t turn until they start seeing their wages match the rate of inflation.

When bank accounts begin to grow again, and when folks can again afford all those things they used to purchase, then they’ll start to agree with journalists who seem to think their job is to make Joe Biden look better. The American people are not out of touch with reality. These journalists are.