Our first real taste of high inflation was early in our marriage, during the Jimmy Carter presidency. Costs were high and rising, and few working-class incomes were able to keep up. Rising prices meant gradually losing the value of our dollars, and our income. Well, thirty years or more later, inflation is back. The article linked below tells part of the story, but not all of it.
The rack-up of inflation by category explains which types of purchases (e.g., meat, fuel, etc) have been impacted the most, but the analysis stuffs a lot of data through a Cuisinart to report averages for the US as a whole. The hard reality is that inflation and its impact on our savings, income, and cost of living varies from one state to another, and from one region to another. For example, if you live close to your work, your rising cost of transportation will not be as problematic for you as for someone who lives a long distance from their work. If you live in a part of the country with warm winters, the rising cost of energy to heat your home will not matter as much. With these considerations in mind, the averaged figures reported in the linked article necessarily hide a lot of higher and lower inflation percentages.
Several members of the chattering class and members of our leadership elite assert that the new round of inflation 1) is a surprise, 2) is only temporary and will dwindle away in a few months, 3) has nothing to do with the large amounts of money printed and injected into the economy over the past few months, or 4) will not be aggravated by immense amounts of proposed new federal spending. If you believe any of these claims, then for your own good please do not talk to anyone with a bridge to sell.
4 thoughts on “A Different Kind of Income Loss”
Pretty political. Not my favorite cup.
Political in a policy sense, maybe, but not political in any partisan sense. I don’t know of any political party in the US that has not contributed to our economic problems. As Psalm 146 says, “Put not your trust in princes…”
I’m not an economist, but I recall a similar economy btwn 2005 and 2008. The prices of homes were going through the ceiling and security investments were being collateralized with mortgage back securities. I believe the price of gasoline was moving up between 2010 and 2013, though not as high as today. Greenspan was keeping interest rates artificially low. I won’t try to predict where this will all end, but spending money this country does not have does not bode well for the future of the United States.
Good observations. I recall the stagflation and high interest rates leading up into 1990, and how it took some time for the country to recover from inflationary fevers.