Uh oh—don’t tell Governor Noem and Senator Manchin, but President Biden’s Inflation Reduction Act may be working:
Friday’s report from the Commerce Department showed that consumer prices rose 0.3% from January to February, down from a 0.6% increase from December to January. Measured year-over-year, prices rose 5%, slower than the 5.3% annual increase in January.
Excluding volatile food and energy prices, so-called core inflation rose 0.3% from January and 4.6% from a year earlier. Both were slowdowns from the previous month. The Fed is believed to pay particular attention to the core measure as a gauge of underlying inflation pressures.
Taken as a whole, Friday’s figures show that inflation pressures, though easing gradually, still maintain a grip on the economy [“A Key Inflation Gauge Tracked by the Fed Slowed in February,” AP via KELO-TV, 2023.04.02].
5% inflation is still more than we had before all the supply-chain disruptions of the pandemic, but it beats the 9.1% peak we saw last June, two months before President Biden signed the Inflation Reduction Act.
So . . . inflation w a s transitory.
And maybe the SD congressional delegation was WRONG; that Biden’s American Rescue Plan was needed to turn the corner from the orange man’s disastrous economy. https://www.sdnewswatch.org/stories/south-dakota-republicans-kristi-noem-john-thune-criticize-arpa/
It’s the old broken record. Republicants break the economy. Democrats fix the economy. Now thune filed a bill to elliminate the estate tax – a tax paid by only the wealthiest. Follow the money to thune’s campaign chest.
Inflation is caused by not enough consumer goods and basic industrial supplies and an overabundance of consumer demand. Consumers seem to have had ample cash on hand and credit, and chased after a shortage of consumer goods. The big problem was the disruption in the international supply lines which are just now being ironed out. In some ways, it’s a bearable problem, more mental than physical in its’ impact. Face it, when consumer goods get too expensive, people quit buying and use their money for essentials. Deflation is the crippler of economies and the bringer of Depressions.
Arlo Blundt, Jack Kirby originally named Galactus, Devourer of Worlds as Deflation, the Crippler of Economies and the Bringer of Depressions, but Stan Lee made him change the name
Wage, food, and credit inflation will be with us for a while. The president, treasury, and federal reserve cannot do much more than window dressing. And congress is too corrupt to act in the nation’s best interest.
Wage inflation – because the US (and SD) have holes in their demographic pyramids that will last until 2038 – unless they vastly increase immigration. They failed to “create” workers 20+ years ago, perhaps due to republicant anti-family policies. The only way to create workers out of thin air now is to increase immigration – which the republicant base abhors. Mexican immigration is negative for 12 of the past 13 years since opportunities in Mexico are better than those in the US. Thanks republicants.
Food inflation – because the world is taking Russian supplied fertilizers and Russian and Ukraine grains off line for the foreseeable future. The US will have fertilizer and food – but the US prices will inflate along with global food inflation. Then there are the California floods reducing fresh fruit, vegetable, and nut crops for at least one season. Plant gardens.
Credit inflation – the boomers, US largest generation until their time, are retiring en-mass. When folks retire they convert savings to T-bills and “safe” investments because they lack earnings to weather an economic downturn. Thus, the past generation of cheap credit is gone until the larger Millennial generation picks up its spending and investing – in about 15 years.
And the 8th Century Saudis, never our friend, are decreasing oil production to raise prices. Thankfully, the US is energy independent AND energy production from renewables exceeded that from coal for the first time. Biden has to continue stiff-arming the greens to drill until renewables are able to offset more of US energy consumption. (Invest in renewables: wind, solar, geothermal (as are the Western Governor’s Association), and heat pumps.)
Yes, the “supply” inflation was artificial, transitory, and predictable. Empty shipping containers are now stacked up at ports and around the nation. Retailers have firesales reducing their oversupply/over-ordering. Rapidly helping Ukraine to beat Russia will help. Nevertheless we, the US, have systemic issues – which become positives with returning our industrial base to the US. Those issues are worse if Russia wins or protracts its western invasions.
Jakc, Stan Lee just followed DC by three months through out the 1960’s. It worked for him.
John..excellent post…no where to run, no where to hide.
Corporate price gouging has a lot to do with it, as we continue to deal with “inflation” corporate profits are at all time record highs and it’s not even close. Corporations all over the food and energy sectors are raking in enormous profits.
This 38m conversation with Peter Zeihan lays out our likely future. It ain’t rocket science. It’s mostly geography and demographics with national interest thrown in.
https://www.youtube.com/watch?v=l4eXy-fD2sg