Hey, let’s blame someone for inflation
Americans are pissed. They’re pissed that COVID is still affecting their lives. They’re pissed that prices are on the rise and that product shortages are everywhere, and they want to assign blame because it’s easier to blame someone than try and understand what’s happening.
It probably isn’t much consolation for Americans struggling with the highest inflation in 40 years, but they are not alone. In the European Union, prices are rising faster than ever since the euro currency was introduced. The annual inflation rate in the United Kingdom hit 5.4 percent in December, the highest figure there in nearly 30 years. Canada’s consumer prices are rising twice as fast as before the pandemic.
Even in Japan, where prices have been depressed almost continuously since the collapse of the late 1980s real estate bubble, the central bank in recent days revised its assessment of inflation risks upward for the first time in eight years. Among major economies, only China has a lower inflation rate today than in early 2020.
Around the world, soaring prices are emerging as a feature of the post-pandemic recovery, prompting some central banks to pivot to inflation-fighting.
The new focus caps an era since the 2008 financial crisis that saw global forces — such as the rise of cross-border supply chains and a decline in workers’ bargaining power — keep inflation subdued.
Romney’s focus on inflation alone to claim that Americans are “7% poorer” leaves out half of the equation: rising incomes. An unusually rapid rise in wages erased a lot of, although not all of, the inflation bump last year. Between December 2020 and December 2021, average hourly earnings for private employees rose by 4.7%, which is a healthy increase by historical standards. That still meant the typical American fell behind by 2.3%, a notable and problematic figure. But that’s a fraction of the 7% that Romney cited.
For most of last year, Federal Reserve Chairman Jerome Powell insisted that the high levels of inflation Americans were experiencing was “transitory,” meaning it would cool as the economy recovered from the coronavirus-induced recession.
One other thing. P&G just reported record profits, yet they are raising the price of one of their leading brands, Tide. Yes, some brands are raising prices because they can, feeling consumers are flush with cash. Eventually, the media will figure that out.
If consumers don’t feel good about the economy, they will blame someone, and right now, it’s easy to blame Biden. That is just the way things are, unfortunately.
Originally published at https://commonsenseandpolitics.com on January 23, 2022.