More Pinocchios For The White House

On Tuesday, Breitbart posted an article about the Biden administration’s claim that the biggest driver of American inflation in the war in Ukraine. It is interesting that this claim is coming out as many economists believe that the economic growth numbers that will come out at the end of this month will show that America is in a recession according to the classical definition of the word recession.

The article notes:

Inflation was high and rising long before the recent Russian invasion of Ukraine. The Consumer Price Index (CPI) increased 0.6 percent in May of 2021 after rising 0.8 percent in April., On an annual basis, prices were up 5.0 percent, the largest 12-month increase since a 5.4-percent increase for the period ending August 2008.

Core inflation, which excludes food and energy, was 3.8 percent over the previous 12 months, the largest 12-month increase since the period ending June 1992.

The article concludes:

The biggest factor in the rise of energy prices has been increased global demand and a lack of capital investment. The latter was caused, in part, by ESG investing, Biden’s promise to end fossil fuels, and regulators discouraging fossil fuel production.

Yet inflation is still very high even with energy excluded. Absent energy, the CPI is up 6.6 percent year over year and rose 0.7 percent in May from April. This demonstrates that Putin has very little to do with the bulk of U.S. inflation.

People who normally invest in finding oil are being very cautious right now. Banks have slowed lending to oil companies for exploration because the government is not allowing the exploration needed to keep America energy independent. The first step toward ending inflation would be open up drilling (and the necessary pipelines) to keep the income from the energy market in America. The next step would be removing at least one in three government regulations on business and people trying to start businesses. Don’t look for either solution under the Biden administration.

 

Life In America Is Getting More Expensive

On Friday, The Daily Caller posted an article about the impact of inflation on household budgets.

The article reports:

The Consumer Price Index (CPI) reached its highest rate in over 40 years in May, adding more strain on U.S. household budgets.

American families watched as consumer prices for necessities like groceries, oil and gas, and transportation rose 8.6% in the last year, according to the Friday U.S. Bureau of Labor Statistics (BLS) report.

The CPI, which measures the change in price for products paid for by U.S. consumers, increased a startling 1% in May after only rising 0.3% in April, the BLS report shows.

The skyrocketing rates affect all areas of American life, but shelter, gasoline, and food saw the highest price increases.

The article concludes:

Records show food prices rose 1.2% in May, an increase from the .9% rise in April. The food at home index climbed for the fifth consecutive month, increasing 1.4% in May. The price for American families to eat at home has risen 11.9% over the past 12 months, making it the largest 12-month increase since April 1979, reported BLS.

“All six major grocery store food group indexes increased over the [last 12-months], with five of the six rising more than 10 percent. The index for meats, poultry, fish, and eggs increased the most, rising 14.2 percent, with the index for eggs increasing 32.2 percent,” the BLS report stated.

Fruits and vegetables rose 8.2%, with other food at home rising 12.6%.

Transportation costs, like new and used cars, and airline fares, also rose. The price of new vehicles rose 1% in May and 12.6% over the past 12-month. The used car index increased 1.8% in May and 16.1% over the past year. Airline fares rose 12.6% in May alone, after increasing 18.6% in April, statistics show.

There are a lot of reasons for this increase in inflation. There is also a belief in some circles that it is by design–inflation makes the national debt easier to pay off. Unfortunately, if the Federal Reserve raises interest rates, the interest on the debt increases dramatically. Basically, excessive government spending is a major source of inflation. The dramatic increase in fuel prices has a trickle-down impact on inflation and is also contributing to the problem. Both of these things are correctable if we had an administration that wanted to correct them.

The Biden Economy

“If it ain’t broke, don’t fix it” is a statement generally attributed to T. Bert (Thomas Bertram) Lance, the Director of the Office of Management and Budget in Jimmy Carter’s 1977 administration. It is a statement that the Biden administration would have done well to listen to when they took office.

On Wednesday, Breitbart posted an article about the latest inflation numbers.

The article reports:

The Department of Labor said Wednesday that the Consumer Price Index rose 8.3 percent compared with a year ago. Prices were up 0.3 percent compared with the prior month.

This is the eleventh straight month of inflation above 5 percent. Prices rose at an annual rate of 8.5 percent in March. This was the month since September 2021 that the year-over-year inflation figure was not higher than the month earlier.

Economists had forecast CPI to rise by 0.2 percent for the month and 8.1 percent compared with a year ago.

Core CPI, which excludes food and energy, rose 0.6 percent, well above the 0.4 percent estimate. Compared with a year ago, core prices were up 6.2 percent, above the 6.0 percent expected.

After inflation average hourly earnings for all employees fell 0.1 percent from March to April, the U.S. Bureau of Labor Statistics said. Real average hourly earnings decreased 2.6 percent, seasonally adjusted, from April 2021 to April 2022.

One of the main causes of the increased inflation is runaway government spending. Meanwhile on Tuesday night, The House of Representatives passed a $39.8 billion bill to aid Ukraine. Where do they think this money is going to come from?

 

 

Are You Better Off Now Than You Were A Year Ago?

In the past, many election campaigns have asked the question, “Are you better off now than you were four years ago?” We have seen the results of an election even after only one year.

The Wall Street Journal posted an article Thursday about the current rate of inflation.

The article reports:

A relentless surge in U.S. inflation reached another four-decade high last month, accelerating to a 7.5% annual rate as strong consumer demand collided with pandemic-related supply disruptions.

The Labor Department on Thursday said the consumer-price index—which measures what consumers pay for goods and services—in January reached its highest level since February 1982, when compared with the same month a year ago. That put inflation above December’s 7% annual rate and well above the 1.8% annual rate for inflation in 2019 ahead of the pandemic.

The so-called core price index, which excludes the often volatile categories of food and energy, climbed 6% in January from a year earlier. That was a sharper rise than December’s 5.5% increase and the highest rate in nearly 40 years.

Prices were up sharply in January for a number of everyday household items, including food, vehicles, shelter and electricity. A sharp uptick in housing rental prices—one of the biggest monthly costs for households—contributed to last month’s increase.

High inflation is the dark side of the unusually strong economy that has been powered in part by government stimulus to counter the pandemic’s impact. January’s continued acceleration increased the likelihood that Federal Reserve officials could speed up a series of interest-rate increases this spring to ease surging prices and cool the economy.

Inflation is a tax that impacts everyone. When your grocery bill doubles, you have to find a way to pay for the increase and still pay your other monthly bills. People who live paycheck to paycheck are being negatively impacted. The increased price of gasoline impacts the spending power of everyone who has to commute to work every day and the price of anything we buy that is transported by truck.

Elections have consequences.

Is The Misery Index Back?

In the 1970’s Chicago Economist Robert Barro coined the phrase ‘misery index.’ The phrase was used to describe a number obtained by adding the unemployment rate to the inflation rate. During the Carter administration, that number ranged between 12 and 17 percent. During the Trump administration, that number ranged between 5 and 7 percent. I shudder to think where it is headed during the Biden administration.

Yesterday The New York Post posted an article about the current rate of inflation.

The article reports:

Inflation continued to surge in July, but appeared to settle close to the fastest pace in almost 13 years as the economy continues to emerge from the pandemic, the feds said Wednesday.

The Labor Department’s Consumer Price Index, which measures a basket of goods and services as well as energy and food costs, jumped 5.4 percent in July from a year earlier.

That’s the same as June’s 5.4 percent year-over-year rise in prices, which marked the biggest 12-month rise since August 2008, just before the financial crisis sent the US into the worst recession it had seen since the Great Depression.

Consumer prices rose 0.5 percent from the month prior, the Labor Department said.

Economists surveyed by Dow Jones expected a 5.3 percent year-over-year spike in July and monthly increase of 0.5 percent.

The core consumer price index, which excludes volatile food and energy costs, rose 4.3 percent from a year ago, lower than the 4.5 percent year-over-year jump that the index saw in June, which marked the fastest acceleration since 1991.

The article concludes:

Federal Reserve officials have so far maintained their position that inflation is mostly temporary and will likely subside this year. They’ve cited this as a reason why they haven’t yet pulled back on their economic support measures like the bond-buying program.

Last week’s July jobs report showed that the country added a whopping 943,000 jobs in the month, more than expected, in a sign that the labor market recovery could finally be gaining steam.

Fed officials have said they will look for more confirmation of that in the next few jobs reports before a tapering of their financial support measures will be considered.

“I think this keeps taper talk on the table because inflation is staying relatively high and transitory may mean a little longer,” Minopoli said.

“If the supply chain kinks and businesses raising prices remains sustained, ‘transitory inflation’ might be a little less transitory than Fed Chair Powell will like and the hawks at the Fed may push a little harder on timing and speed of taper,” he added.

I remember the 1970’s–gas lines and all– and I don’t want to go back there.

The Economic Recovery In Real Numbers

Politichicks posted an article today with some of the economic numbers President Obama seems to have omitted from his State of the Union speech.

The article reminds us:

While it might be true that businesses have created 11 million jobs (not Obama), what President Obama fails to mention is that he has been in office 6 years and during his first year in office the economy lost over 4 million jobs. Even with the new jobs created, at best, the economy has created a net amount of 7 million jobs private sector jobs. However, due to the fact that there has also been a loss in government jobs, under President Obama there has been a creation of, at most, 6.4 million jobs during his time in office.

What President Obama and most media outlets also failed to mention is that in order to keep up with population growth, the economy needs to create at least 125,000 jobs per month or 9,000,000 jobs in the 72 months since President Obama took office.

The article also reports:

  • The current labor force participation rate is 62.7%, which matches the lowest rate on record. The lowest rate on record was set in September 2014.
  • Since the beginning of the Great Recession (2008), only 943,000 more people are employed, but the number of individuals over the age of 16 has grown by 14,159,000.
  • Worker’s wages have stayed stagnated. In constant dollars (dollars adjusted for inflation), worker’s wages have actually decreased.
  • The Consumer Price Index has increased by 11.2% since President Obama took office, even with the price of energy dropping by almost half.

The article concludes:

The truth of the matter is that we have endured the worst economic recovery on record and much of it is due to President Obama’s policies. Even with the millions of new jobs that have been created and the fact that people’s confidence in the economy is increasing, we still have a long way to go to reach pre-recession economic levels and if President Obama keeps pushing his big government policies, we may never get there.

Somehow none of the above was mentioned in the State of the Union speech.

 

Move Along, Nothing To See Here

Yesterday the Washington Examiner posted an article with the headline, “Fun with the Fed: Inflation is low, but the cost of living is up.” Meanwhile, CNS News posted the following graph yesterday:

Price of Ground Beef Hits All-Time High in November

It is hard for anyone who has been in a grocery store in the past year to believe that inflation is low.

The Washington Examiner reports:

From July to August, the “Core Consumer Price Index” did not move. That means zero inflation, if you use the measure of inflation the Federal Reserve uses when setting monetary policy. But core CPI omits volatile prices like food and energy. If you have a family, you’re probably pretty aware that food and utility bills are a big factor.

The result: The inflation measure that guides Fed decisionmaking has little resemblance to the inflation measure that guides family budgetmaking.

This is another example of the government manipulating numbers to get the desired result. Any resemblance to what is actually taking place and what the government is reporting is purely coincidental.

The Washington Examiner lists some of the price increases in the last year that impact families trying to live within their budget:

Food at home is up 2.9 percent.

Electricity is up 4.1 percent and gas bills are up 5.8 percent.

Coffee is up more than 50 percent from last year.

The article reports:

The net result is that life has gotten considerably more expensive for me since this time last year. I’m not saying this ought to guide our monetary policy. I’m just saying that core CPI doesn’t track the cost of living.