Good News and Bad News About Inflation
It might be at 30-year highs, but Joe Biden is going to fix everything.
Great news, everyone: Treasury Secretary Janet Yellen promises the Federal Reserve “wouldn’t permit” inflation to reach double digits like it was in the 1970s.
The bad news: Inflation hit 6.2% in October, which is the highest since 1990 and worse than “experts” expected. Yes, again with the experts and expectations.
There’s plenty more good news/bad news, too. Hourly wages rose 0.4% in October, but real wages (accounting for inflation) fell by 0.5%. Higher wages are great, but companies have to pay for that by raising prices, which then reduces purchasing power.
If you trade in your used car, you’ll get a great offer, but only because prices are up 26.4% for the year. New cars are a whole lot better, but only because prices are up just 9.8% by comparison. And good luck finding one.
So-called core inflation is up 6.2% for the year, but that’s only because that measure doesn’t include more volatile things like food and energy. Fuel prices are up 59.1% for the year, and energy overall is 30% higher. That tends to happen when an administration wages war on American energy producers.
Food prices overall are up “only” 5.4%, but meat, poultry, fish, and eggs are collectively 11.9% more expensive this year. You might also notice another kind of inflation — smaller amounts of food in the same packaging for the same price. Unfortunately, food and energy tend to dominate family budgets.
The good news is that few people are still telling you not to gather for Thanksgiving this year. The bad news is that, according to The New York Times, “Thanksgiving 2021 could be the most expensive meal in the history of the holiday.” If you can find one, turkey prices alone are up 41%, though, to be fair, demand and prices last year were suppressed. Traveling by plane, train, or automobile will cost more this year too.
The good news from CNBC: “The [inflation] data comes as policymakers such as Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen maintain that the current price pressures are temporary and related to pandemic-specific issues. While they have conceded that inflation has been more persistent than they expected, they see conditions returning to normal over the next year or so.”
The bad news: Yellen, Powell, and others persist in denying that inflation is a longer-term problem, and that 2022 likely won’t show the improvement they keep promising. A big indicator of that is wholesale prices, which were up 8.6% in October. The Labor Department has tracked that number only since 2010, but this is the worst yet. And as Mercer University economist Antonio Saravia warns, “It shows that inflation is not slowing down and prices continue to rise.” The higher prices retailers pay today will passed on to consumers tomorrow.
“By all accounts, the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse,” admits Senator Joe Manchin (D-WV). “From the grocery store to the gas pump, Americans know the inflation tax is real and D.C. can no longer ignore the economic pain Americans feel every day.”
Even so, Yellen insists: “As people feel safer, the demand for these goods, whose prices are rising, will diminish, and they’re going to go back to services in a more normal pattern. And at that point, I’d expect the price increases to level off, and we’ll go back to inflation that’s closer to the 2% we consider normal.”
By the way, even 2% inflation is still a huge tax on consumers.
We’ll switch the good news/bad news order on this one: The bad news is that the disruptions in the supply chain are a big driver of rising prices. The “good” news is that there are literally tons of goods parked on container ships in the Pacific just waiting to be unloaded. Whenever union port workers feel like getting to it.
As we’ve said repeatedly, government shut down the economy, government paid workers more to not go back to work than to take a job, government inflates the money supply with massive spending and by printing money, and government keeps interest rates so low that it increases demand for debt. Yet Joe Biden and congressional Democrats plan to do it all even harder, because they’re convinced that the reason all of Barack Obama’s “stimulus” spending resulted in the slowest recovery on record was because it wasn’t big enough.
Indeed, Biden has the gall to declare, “The bipartisan infrastructure deal will help ease inflationary pressures.” The opposite is true.
“Mr. Obama’s economy suffered from a lack of demand,” says the Wall Street Journal’s Greg Ip. “Mr. Biden’s suffers from a lack of supply.” Therefore, “pouring more demand into a supply-constrained economy,” as Biden did earlier this year already and wants to do again, “fed inflation.”
On a final note, The New York Times says the real culprit here is ungrateful citizens. “Americans Are Flush With Cash and Jobs,” its headline reads. “They Also Think the Economy Is Awful.” In this telling, we’re letting inflation manipulate us into thinking the economy is bad when it’s actually good. All of us rubes out here in flyover country just aren’t thankful enough for everything Joe Biden has done for us.
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