Economists may know (and even agree) that the current inflation is attributable to the pandemic and its aftermath: sluggish supply chains, reluctant workers, shortages and interrupted energy deliveries. We also know the government has mainlined trillions of dollars in buying power to consumers since the spring of 2020. Price hikes might be considered all but inevitable.
But one of the lessons from inflationary eras past is that voters are less interested in causal responsibility than in forcing a change. In other words, if you are in office now, you are holding the bag.
For the past several months, Americans have felt the pain of higher inflation as they spend more on items ranging from food to gasoline to used cars to housing. Many observers wonder whether the inflation is being caused by the Federal Reserve keeping interest rates low and buying up lots of government debt or by supply chain disruptions and other production bottlenecks caused by the COVID-19 pandemic. If it’s the former, then the Fed will need to tighten monetary policy to get inflation under control. If it’s the latter, though, the recent uptick in prices will dissipate on its o
Here's another unexpected example of how supply chains have been upended by the pandemic: Glass bottles used for everything from vinegar to pasta sauces are getting tied up in their own bottlenecks. That's driving prices higher, when you can get the bottles at all.
Just like many other industries struggling to secure supplies, producers of pasta sauce and high-end spirits are seeing the glass used in their humble containers tied up in massive cargo jams, and that's forcing them to either absorb the higher costs or pass them on to consumers.
I am no fan of glass, usually because it's heavy and I'm prone to break it. I try to get everything in paper or plastic (which I can burn), or at least metal cans that can be flattened and saved for the yearly trip to the recycling center. But it's just another problem with inflation that we are facing.
Washington — American consumers absorbed another surge in prices in May — a 0.6% increase over April and 5% over the past year, the biggest 12-month inflation spike since 2008.
The May rise in consumer prices that the Labor Department reported Thursday reflected a range of goods and services now in growing demand as people increasingly shop, travel, dine out and attend entertainment events in a rapidly reopening economy.
Prices for a lot of things are surging across the U.S., and John McConnell's recent car-shopping experience helps explain why.
McConnell, from Colorado Springs, Colo., was recently looking for a Toyota Tacoma to replace his two-year-old Nissan Altima and was shocked to see the one he wanted priced several thousand dollars above the sticker price.
He plans to buy it anyway.
"I'm not going through a midlife crisis. I just kind of have an itch for this," McConnell says. "I'm willing to pay a little bit more right now, I guess, because right now I can afford to."
After a year of the coronavirus pandemic, McConnell was itching to go camping more and do more outdoor activities. And like many Americans who were able to continue working through the pandemic, he had the money.
There’s a smallish but growing chorus of economists and policymakers sounding the alarm about inflation. They warn that a combination of government stimulus and the impending economic snapback will cause prices to overheat. A lot of regular people might be confused by this. After all, the country is still in the middle of the Covid-19 outbreak, the economy is far from back to normal, and we’re still millions of jobs short from where we were pre-pandemic. Many economists and lawmakers have spent months arguing that the risk is doing too little, not too much, to save the economy. Some say a little bit of inflation may be a good thing, especially given how low it’s been in the recent past.
At one level I'm a bit worried about inflation, as external economic disruptions can cause inflation but also America is in a much different place than in the late 1960s. There is no new Interstate system being built now, no major urban renewal projects or college campuses being built. No Vietnam War today.
On the other hand, oil and natural gas production fell dramatically during the pandemic, and suddenly the highways are once again packed bumper to bumper with fuel hungry cars and businesses are once again firing up their lights and cranking up the air conditioning. A significant spike in oil prices into the $200 plus range could certainly spark inflation in some parts of the economy, as could a spike in natural gas prices as the power plants has become very addicted to gas.