Inflation continued to rise in July, hitting 5.4 percent compared to a year ago, but Wall Street breathed a sigh of relief because the numbers weren’t as bad as expected. Stocks were up sharply following the release of inflation numbers as investors took the increase in prices in stride.
The White House continues to insist the increase in prices is nothing to worry about, that once the supply chains catch up with demand, everything will be peachy. They refuse to acknowledge that spending $5 trillion we don’t have on pandemic relief has anything to do with the jump in prices.
They can spin the inflation threat any way they wish, they’re not fooling the American people.
A recent Fox News poll found 83 percent of Americans are “extremely” or “very” concerned about inflation, with inflation being a top-level concern for both Democrats and Republicans.
Joe Biden’s biggest apologist is Federal Reserve Chairman Jerome Powell, who — coincidentally or not — is up for another term as Fed chairman. Radicals in Congress are pressing Biden not to nominate Powell for a second term, so Powell’s soothing words about inflation should be seen in that context.
“It’s new, used and rental cars. It’s airplane tickets. It’s hotels,” Fed Chair Jerome H. Powell said last month, referring to sectors that have seen steep price bumps. “Each of those has a story attached to it that is — it is really about the reopening of the economy. So we look at that, and we think that those are temporary things, because the supply side will respond. The economy will adapt.”
Still, the Fed has acknowledged that there is no playbook for this economy. Surging coronavirus cases and the spread of the delta variant weigh on the path forward, including in areas that have reimposed mask mandates or other restrictions.
“We’re in a very turbulent space in terms of pricing,” Atlanta Federal Reserve President Raphael Bostic told reporters on Monday. “There are lots of moving parts, and I’m monitoring that closely.”
Obviously, Powell and the other Fed presidents don’t want to start a panic by shooting off their mouths about inflationary pressures leading to higher interest rates. But they can’t be seen as being too sanguine in the face of rising inflation numbers. So they play the two-handed economist — the “on the one hand or the other hand” scenario where they cover all the angles.
On the inflation front, the Fed is staying alert for any signs of sustained price increases that pulse through the entire economy. For example, rising rents and soaring home prices have concerned some economists who are unsure whether the cost of shelter will fall back down.
There’s about as much chance of that as food prices falling back down. Increases in our grocery bills continue to get worse — especially processed food items that aren’t seasonally adjusted like fresh meats, fruits, and vegetables.
Most of us don’t care what economists are saying. We know that the amount we spend on food is rising every week. That’s the hidden cost of inflation. It makes us poorer. Inflation has wiped away income gains made by blue-collar workers during and after the pandemic,
And it’s only downhill from here.