If you have been shopping anytime recently then you will be paying more for goods and services….and sadly it does not look like there is any relief any time soon…..
Prices for US consumers jumped 6.2% in October compared with a year earlier as surging costs for food, gas, and housing left Americans grappling with the highest inflation rate since 1990. The year-over-year increase in the consumer price index exceeded the 5.4% rise in September, the Labor Department reported Wednesday. The Wall Street Journal notes it’s the fifth month in a row where the increase was north of 5%. From September to October, prices jumped 0.9%, the highest month-over-month increase since June.
Energy costs soared 4.8% just from September to October, with gasoline, natural gas, and heating oil surging for the same reason that many other commodities have grown more expensive: Demand has risen sharply as Americans are driving and flying more, but supplies haven’t kept up, reports the AP. “If you … fill your gas tank on the way home so you can go to work or take your kids to school, you’re feeling this,” Mary Daly, president of the Federal Reserve Bank of San Francisco, tells NPR, noting that pain is looming in the form of ramped up heating bills this winter. To wit, the Energy Department forecasts those bills will be up 54% this winter over last.
Economists still expect inflation to slow once supply bottlenecks are cleared and Americans shift more of their consumption back to pre-pandemic norms. As COVID-19 fades, consumers should spend more on travel, entertainment, and other services and less on goods such as cars, furniture, and appliances, which would reduce pressure on supply chains. But no one knows how long that might take, though predictions skew pessimistic. “The inflation overshoot will likely get worse before it gets better,” said Goldman Sachs economists in a research note Sunday. “Inflation is clearly getting worse before it gets better,” echoes Principal Global Investors’ head strategist to CNBC.
Inflation is where Biden is losing support….to the point that the White House is trying to find a way out of the downward spiral….
For months, the White House downplayed concerns about inflation by describing the steep rise in prices as “transitory”—just a temporary blip related to the pandemic recovery. But as Kevin Liptak writes in a CNN analysis, President Biden didn’t use the term Wednesday when discussing the news that inflation had surged to a 30-year high. Biden has no choice but to shift his message—”Did you ever think you’d be paying this much for a gallon of gas?” he asked—given that Americans are facing inflation every day at the gas pump and grocery store, and there’s no end in sight. Coverage:
- Context: “The metaphor of frogs in a pot of water has never been a more apt analogy,” writes Mark Cudmore in an assessment of rising inflation at Bloomberg. “A year ago, if you had told any investor the inflation … they would be seeing today, there would have been disbelief and uproar.” Since last year, inflation is up a whopping 6.2%.
- Biden’s problem: By many traditional measures, the pandemic rebound is booming, notes CNBC. But inflation is so tangible that most Americans—57% in an NBC poll—disapprove of Biden’s handling of the economy. In fact, fears about inflation and the economy appear to be outpacing those of COVID. Democrats will try to counter with legislative achievements on infrastructure spending and climate change, but the political “headwinds” related to prices will be fierce heading into the midterms, predicts policy analyst Ed Mills.
- Echoing that: The president is “in a particularly precarious position because there is little he can do to quickly alleviate the problem,” notes an analysis in the Los Angeles Times. “And even as the job market rebounds and wages rise, inflation threatens to swallow those gains and provide a daily reminder of the problem whenever voters dig into their wallets or swipe their credit cards.” In the meantime, Republicans are intensifying their attacks, blaming Biden for worsening the problem.
- Big voice: Republicans are also happy that Lawrence Summers, a former economic adviser to Barack Obama, has been criticizing the White House for months on inflation. He previously warned that the $1.9 trillion coronavirus relief bill passed in the spring would make things worse. “I think that the policymakers in Washington unfortunately have almost every month been behind the curve,” Summers said on CNN Wednesday, per the Hill. “They said it was transitory; it doesn’t look so transitory. They said it was due to a few specific factors; doesn’t look to be a few specific factors. They said when September came and people went back to school, that the labor force would grow, and it didn’t happen.”
- Bigger picture: Reuters takes a point-by-point look at the inflation criticisms being lobbed at Biden and concludes they’re frequently off base in terms of pure economics, and that many of the underlying problems preceded his administration. But given that inflation is expected to endure well into 2022, that may be of small comfort to Democrats on the campaign trail.
If Biden and the posse cannot find a cure for this economic problem then he can kiss re-election good-bye….what is the old saying….”gonna get worse before it gets better”…..
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