The Patriot Post® · In Brief: Government Disguises Inflation
Every American knows that prices are rising. But are government reports and news headlines giving us an accurate picture? Gene Marks, a CPA and businessman, says no.
The U.S. Bureau of Labor Statistics [recently] reported that consumer prices, on an annualized basis, have increased 5.4 percent. The same department also reported that producer prices have increased annually at a rate of 8.6 percent.
Various Washington officials dismiss it as “temporary” or “transitory,” but Federal Reserve Chairman Jerome Power also admitted it’s “frustrating.” Either way, Marks says they’re disguising the damage.
The government would like us to believe that higher prices are just a short-term bump caused by COVID-related supply chain issues. But it’s not just that. And it’s certainly not a passing bump. People running businesses know this. My clients are seeing price increases that are much higher than what the government is telling us.
That’s because they don’t pay attention to the broad-based inflation numbers that the Bureau of Labor Statistics releases. Instead, they look at the actual costs of the actual materials and labor they are spending to make and then deliver their actual products. And those very specific costs have skyrocketed well beyond the generalized rates released by the government that the media reports. As I visit client after client and look at their purchases, payroll, payables and income statements I’m seeing it too. 5.4 percent? 8.6 percent? LOL, I don’t think so.
Here’s what my clients and I are seeing.
We’re seeing that the cost of producing plastics and resins — core materials used in many manufactured products — has increased 44.6 percent over the past year. Think automakers are having it tough finding chips? That’s the least of their problems, because iron and steel prices, which get used in so many auto components as well as in construction and equipment manufacturing have increased a whopping 96.3 percent in the same period. The price of chemicals, which are used in just about everything, has increased 15.6 percent. Put it all together and the costs of manufacturing products in this country have increased 15.2 percent over the past year, with no relief in sight.
Things are no better in the construction trade, where the cost of gypsum — a core material for cement and drywall, as well as for building roads and highways — has increased 25.3 percent and the prices of construction materials are up 28.8 percent.
And that’s just to make all this stuff. Shipping costs are up 17.3 percent by sea and 20.2 percent by land. Corrugated paperboard and un-laminated polyethylene film costs — major components in packaging materials — are up 18.2 percent and 28.2 percent respectively over the past year.
Then, Marks says, there’s the labor market, which is terribly distorted and short of workers. That all plays into the price of goods. “And once they go up,” he adds, “they’re not going to go down.”
Are these increases caused by supply chain challenges? Labor disruption? Excessive government spending and increased money supply fueled by cheap money and an over-capitalized federal reserve bank? It’s all of these factors. But if you’re running a business that’s not important. What’s important is that the inflation numbers that we’re reading in the major media are significantly understated. Prices are actually higher than the government wants us to know. And they’re going to continue to increase.