On Tuesday, the Labor Department confirmed yet another sign of inflationary economic doom: the producer price index (PPI) increased at a record rate in May, surging 6.6 percent over May 2020 levels.
“Job Creators Network was the first to warn about the inflationary risks of President Biden’s left-wing agenda,” Job Creators Network President and CEO Alfredo Ortiz declared in a statement, referring to a prescient March op-ed. “Now we are seeing the consequences of Biden’s record spending, with producer prices surging at the fastest pace in history. If you’re having flashbacks to Jimmy Carter’s presidency, you’re not alone, and JCN was the first to make the comparison.”
The Bureau of Labor Statistics (BLS) reported the 6.6 percent year-over-year increase in the producer price index on Tuesday, marking the largest 12-month increase since BLS began tracking the data in November 2010, CNBC reported. On a monthly basis, the PPI for final demand rose 0.8 percent, above the Dow Jones estimate of 0.5 percent.
These higher prices came amid a pronounced dip in retail sales, which fell 1.3 percent in May, far worse than the 0.6 percent estimate. However, the Census Bureau tempered the bad news by revising April’s retail sales figure from flat to a gain of 0.9 percent.
These numbers underscore the worsening portent of 1970s-style stagflation, the economic malaise that damaged America and did in Jimmy Carter’s presidency.
The core personal consumption expenditures index — which Federal Reserve officials consider the best indicator of inflation — rose 3.1 percent in April, above the 2.9 percent economists predicted. The Fed considers 2 percent to be healthy, although it will allow the price index to grow in the interest of promoting full employment. Unfortunately, unemployment remained above 6 percent in April despite economists predicting that it would dip below 6 percent.
This persistent unemployment should not surprise Americans who are familiar with the Democrats’ $1.9 trillion blue pork bill masquerading as a “COVID-19 relief” stimulus. Only 8.6 percent of the funding went directly to combatting the pandemic, while hundreds of billions went to blue-state bailouts. The bill also sent $1,400 checks to individuals, and extended the $400/week “enhanced” unemployment benefits.
Thanks to this “enhanced” unemployment, many workers make more money without a job than they did when they had one. Rather than reconsidering this perverse incentive not to work, Biden and his fellow Democrats further entrenched it.
Biden’s other policies would also make the economic situation worse. The president has called for Congress to spend trillions more in social programs that his tax plans cannot hope to fund. Essentially printing money decreases trust in the U.S. dollar and sparks inflation.
Last week, Deutsche Bank issued a chilling warning about the prospect of inflation.
“Few still remember how our societies and economies were threatened by high inflation 50 years ago,” the bank’s economists warned. ” The most basic laws of economics, the ones that have stood the test of time over a millennium, have not been suspended. An explosive growth in debt financed largely by central banks is likely to lead to higher inflation.”
The Deutsche Bank report gave two other macroeconomic reasons to expect inflation.
First, over the last 40 years, the integration of China and other emerging markets into the global economy has meant that hundreds of millions of cheap workers entered a globalizing workforce, putting downward pressure on wages and prices. Yet in the years and decades ahead, the working-age population will decline across the globe. This scarcity of workers will press wages up and increase the prices of goods and services.
Secondly, the COVID-19 pandemic has shocked many countries into realizing the weaknesses of their supply chains. Countries’ desire to tighten their supply chains will result in more domestic production, leading to higher production costs.
As PJ Media’s David Goldman wrote, “inflation is an insidious tax that robs the poor and the middle class. It favors the U.S. government, the world’s biggest debtor, because the government expects to pay back its creditors in Monopoly money. It crushes the real earnings of the vast majority of American households and destroys their savings. That’s what the Democratics are up to. And that’s what might bring them down–just as 12% inflation brought down Jimmy Carter in 1980.”
Unfortunately, inflation will bring down the U.S. economy along with the Biden Democrats. America needs tighter economic policy in order to fight inflation. That may call for another Reagan-style revolution.