It's called a "reference price." This is how economists describe how consumers feel when they buy an everyday item at a vastly increased cost.
“My brain just cannot rationalize paying twice as much,” Rob Cooper from Amber, Pa., told the Wall Street Journal. “It doesn’t feel right.”
Tens of millions of voters are feeling the same thing. It's the biggest threat to Joe Biden's reelection largely because he has absolutely no counterargument to make to rebut it.
Despite the pace of inflation slowing from its high of 10.6% in August 2023 to the current rate of 3.2%, people are not "feeling" the lower prices. That's because prices are still rising, only at a slower rate.
In some areas of the economy, the increase in prices has been met with utter disbelief. St. Louis resident Dan Kreher says the dry cleaner is where he feels the disconnect.
“It used to be an expense you didn’t think about,” says the 59-year-old mergers and acquisitions adviser. “Now it hurts.”
"The price to clean a single dress shirt has nearly tripled, from $1.50 in 2020 to $4 last month," says the Journal.
Consumers say they could understand paying more for staples at the height of the pandemic amid supply-chain disruptions, worker shortages and surging demand.
But they viewed those price hikes as temporary, says Stephanie Tully, who studies consumer financial decision-making as a professor at the University of Southern California’s Marshall School of Business. “The fact that they’re not and they’re continuing to go up is frustrating.”
The Federal Reserve’s rate-rising campaign has sought to tamp down the pace of price increases, not lower them. Economywide deflation is rare and usually seen as a sign of stagnant or deeply depressed demand.
Biden has come up with a gimmick to try and convince voters that stubbornly high prices are not the fault of him or his policies.
Related: Bidenflation Is Even Worse Than You Think
He has launched a "Strike Force on Unfair and Illegal Pricing" to go after companies that raise their prices "unfairly." The "Strike Force will strengthen interagency efforts to root out and stop illegal corporate behavior that hikes prices on American families through anti-competitive, unfair, deceptive, or fraudulent business practices."
Of course, the Department of Justice already has well-staffed Criminal and Civil Fraud divisions as well as a bloated Anti-Trust division. So this "Strike Force" is all smoke and mirrors, trying to convince the voters that Biden is "doing something about the problem" of high prices.
So how much trouble is Biden really in because prices will never go back to what they were in 2020? Mary Kay Owen, a 65-year-old substitute teacher, is livid about the price increases not only because of how high they are but also because of price unpredictability.
“It’s unfair, and it’s not sustainable, and nobody will explain it,” says Owen.
She’s also frustrated by shrinkflation in the form of nearly empty bags of chips “they must be sprinkling gold flakes in or something.”
She traded down to a cheaper brand of dog food after a 35-pound bag of Science Diet jumped from $37 to $46. And she stopped buying treats she enjoyed her whole life, like Drake’s coffee cakes and Hostess cherry pies.
The cutbacks leave her livid and sad about the state of the economy and her own well-being.
“When nobody can figure out what it’s going to cost when they go to the supermarket this week, something has to change,” she says.
"Something has to change," indeed.
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