Didn’t they tell us that inflation was transitory? That it was no big deal? Also that it had nothing to do with the terrible policies of Biden and the Democrats? (non-paywalled version here)
Still Going Fast, Inflation Changes Drivers
America is now two years into abnormally high inflation — and while the nation appears to be past the worst phase of the biggest spike in price increases in half a century, the road back to normal is a long and uncertain one.
The pop in prices over the 24 months that ended in March eroded wage gains, burdened consumers and spurred a Federal Reserve response that has the potential to cause a recession.
What generated the painful inflation, and what comes next? A look through the data reveals a situation that arose from pandemic disruptions and the government’s response, was worsened by the war in Ukraine and is now cooling as supply problems clear up and the economy slows. But it also illustrates that U.S. inflation today is drastically different from the price increases that first appeared in 2021, driven by stubborn price increases for services like airfare and child care instead of by the cost of goods.
Certainly, the crazy government spending during 2020 did not help, but, most of the lockdowns were instituted by Democrats in Democratic states and cities. Then the crazy spending in 2021 and 2022. Who did that? And the US does not get much from Ukraine which would drive inflation and reduce goods.
The Fed aims for 2% inflation on average over time using the personal consumption expenditures index, which will be released Friday. That figure pulls some of its data from the consumer price index report, which was released two weeks ago and offered a clear picture of the recent inflation trajectory.
Before the pandemic, inflation hovered around 2% as measured by the overall consumer price index and by a “core” measure that strips out food and fuel prices to get a clearer sense of the underlying trend. It dropped sharply at the pandemic’s start in early 2020 as people stayed home and stopped spending money, then rebounded starting in March 2021.
Except, prices are already high, and are mostly not coming down.
In fact, services prices are now the very center of the inflation story.
They could soon start to fade in one key area. Housing costs have been picking up quickly for months, but rent increases have recently slowed in real-time private sector data. That is expected to feed into official inflation numbers by later this year.
That has left policymakers focused on other services, which span an array of purchases including medical care, car repairs and many vacation expenses. How quickly those prices — often called “core services ex-housing” — can retreat will determine whether and when inflation can return to normal.
Good luck with that. And the last thing we need are politicians of any party to muck around with the economy, since most of them really have no idea, as quite a few haven’t worked in the private sector in decades. The top occupation is public service/politics, followed by business (which doesn’t necessarily mean they ran a business), then law, then education. Biden hasn’t even worked in the private sector since 1972. None of them know what they’re doing, and their advisors are no better. Pumping all that cash into the economy was not a good thing.
Good thing that Inflation Reduction Act is working miracles, eh?
Read: Surprise: NY Times Says Inflation Is Still Going Fast »
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