Dan O’Donnell explains why record-high inflation isn’t likely to get better any time soon
Apr. 13, 2022
Perspective by Dan O’Donnell
The Consumer Price Index hit yet another 40-year-high this week, with inflation rising to a higher-than-expected 8.5% over last year. Month-to-month, prices rose by 1.2%, up from the 0.8% increase from January to February.
“The data reflected price rises not seen in the U.S. since the stagflation days of the late 1970s and early ’80s,” noted CNBC’s Jeff Cox.
March was in fact the fourth straight month that inflation hit levels unseen since 1982, and Americans are paying more for literally everything. Used cars are up 35%, while car rentals are up 23.4%, and the price of airline fares is up 23.6%.
This is driven largely by a whopping 76% increase in the price of jet fuel which, coupled with a 43% increase in the price of gasoline, has kept many at home at the precise time the easing of COVID restrictions is making travel enticing again.
Similarly, when many are venturing back to restaurants for the first time in two years, the price of eating out has risen 8%. Even staying in for a meal is dramatically more expensive than it was a year ago: Overall grocery prices are up 10%, while staples like meat, poultry and fish have risen 13.8%, milk is up 13.2%, and eggs have increased 11.2%.
Even when the more volatile food and energy prices are removed from the inflationary equation, the core consumer price index was up 6.5% year-over-year, the largest increase since August 1982. Back then, however, inflationary pressure was beginning to ease, and month-to-month levels started to decrease within two months.
Today, inflation shows no sign of easing in what some have begun calling “Bidenzuela.” The President and his supporters have adopted the infinitely less catchy “Putin’s Price Hike” to explain absolve themselves of blame, but it’s painfully clear that Biden’s policies have brought on this mess.
Last July, Biden said, “There’s nobody suggesting there’s unchecked inflation on the way, no serious economist.”
Inflation first hit 30-year highs last May, a full 10 months before Russia’s invasion of Ukraine and month-to-month inflation has, except for last August, increased every month since. The price of gas, a primary driver of overall inflation, was on average $2.37 per gallon on the day Biden was inaugurated. On February 23rd, the day before the Ukraine invasion, the average price was $3.53 per gallon. It is now $4.10 per gallon, meaning that the average price rose $1.16 before Putin attacked and just 57 cents since.
It is true that the entire world is experiencing higher-than-usual inflation as it emerges from the pandemic and all of the increase in government spending it produced, but the United States has fared far worse than nearly every other nation in managing it. The Pew Research Group examined the rise in inflation rates of 46 countries from the third quarter of 2019 to the third quarter of 2021. The only two countries with a higher spike than the United States were Brazil and Turkey.
Putin didn’t cause this price hike; Biden did. His injection of $1.9 trillion in unnecessary COVID stimulus early in his term coincided directly with the very inflationary pressure former Treasury Secretary Lawrence Summers, a staunch liberal, warned about.
“There is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability,” he wrote in The Washington Post last February. “This will be manageable if monetary and fiscal policy can be rapidly adjusted to address the problem.”
Today, inflation shows no sign of easing in what some have begun calling “Bidenzuela.”
They weren’t. In fact, the Biden Administration for months refused to even acknowledge that inflation was a problem.
“There’s nobody suggesting there’s unchecked inflation on the way, no serious economist,” Biden said last July. “Our experts believe and the data shows that most of the price increases we’ve seen are, were expected and expected to be temporary.”
Even when inflation hit a 40-year high in December and showed no signs of slowing down, Biden said it was “the peak of the crisis.”
“You’ll see it change sooner, quicker, more rapidly than people think,” he added.
Four months later, it certainly has changed but certainly not for the better. This is a full-blown crisis, and the people tasked with leading America out of it have spent the past year either blissfully oblivious to or brazenly lying about the disaster they have created.
And make no mistake, they have created it. They were warned about unnecessary and unwise spending that was deliriously out of whack with the fiscal need of the country, yet they were both stupid and arrogant enough to do it anyway and now they are trying to pin their yearlong failure on an invasion that occurred less than two months ago.
Don’t let them.