“Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair!”-Sam Ewing
CNBC defined “hyperinflation” as a “condition of rapidly rising prices that can ruin currencies and bring down whole economies.”
During most of 2021, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen reassured the American people that the rise above 2 percent of inflation was “transitory.”
On October 22, 2021, for the first time, Powell said he was retiring the word “transitory” from his description of the inflationary environment.
Inflation Exploding While Growth Is Slowing
Under the Biden administration, the role of government in the economy has undergone its biggest shift in 90 years. Rather than fear of inflation and debt, the policy makers are concentrating on broad social goals.
The Federal Reserve recently projected 2.8 percent GDP growth, a sharp dive from their prediction made just last December of 4 percent.
On February 10, The Labor Department reported the Consumer Price Index increased .6 percent in January, driving inflation up 7.5 percent over the past 12 months. This is the highest inflation reading in four decades.
Inflation Outpacing Wage Increases
Wages are not even vaguely keeping pace with rising prices in gas, food and rent.
Despite attempts by the Biden administration to spin the narrative, inflation has soared to a 40-year high while real wages have fallen.
Americans Biggest Concern
Americans are far more concerned about the economy than COVID.
The Associated Press-NORC Center for Public Affairs Research released polling on January 10 showing that only 37 percent of Americans list COVID as one of their top five concerns compared to 68 percent who named the economy as a top five concern.
Low, stable inflation and historically low interest rates have powered the economy for the last three decades. If this starts to unravel, policymakers will face the most challenging years since the 1980’s.
The midterm elections are coming up in November, at which time the U.S. economy could be in the throes of a massive recession.
Democrats could suffer a historic defeat if voters take out their pain on the party in power.
Photo by Simon Cunningham