As Americans Struggle With More Record Price Increases, The White House Dismisses Inflation As A ‘High Class’ Problem

The White House Chief Of Staff Incredibly Is Dismissing Inflation As A ‘High Class’ Problem

White House Chief of Staff Ron Klain endorsed President Obama’s former top economic advisor asserting inflation was among issues that are ‘high class problems.’ (Ron Klain, @WHCOS, Twitter, 10/13/2021)

Yet, Consumer And Producer Inflation Indices Continue To Show Rampant Inflation, Which Means Americans Are Paying Significantly More For Food, Cars, Housing, And Many Other Essential Products

“U.S. inflation accelerated last month and remained at its highest rate in over a decade, with price increases from pandemic-related labor and materials shortages rippling through the economy. The Labor Department said last month’s consumer-price index, which measures what consumers pay for goods and services, rose by 5.4% from a year earlier, in unadjusted terms. That is the same rate as in June and July as the economy reopened, and slightly higher than in August. The so-called core price index, which excludes the often-volatile categories of food and energy, in September climbed 4% from a year earlier, the same rate as in August.” (“Accelerating Inflation Spreads Through the Economy,” The Wall Street Journal, 10/13/2021)

“Inflation at the wholesale level rose 8.6% in September compared to a year ago, the largest advance since the 12-month change was first calculated in 2010. The Labor Department reported Thursday that the monthly increase in its producer price index, which measures inflationary pressures before they reach consumers, was 0.5% for September compared to a 0.7% gain in August. The 8.6% rise for the 12 months ending in September compared to an 8.3% increase for the 12 months ending in August, which had been the previous record 12-month gain.” (“US wholesale prices rose record 8.6% over 12 months,” The Associated Press, 10/14/2021)

Inflation Is Hitting All Americans At Levels Not Seen In Decades

THE WALL STREET JOURNAL EDITORIAL BOARD: “Is inflation still ‘transitory,’ as the Federal Reserve and White House like to say? Not if you’ve been visiting the grocery store, gas pump, online retailer, or anywhere else across the U.S. economy. And not judging by Wednesday’s report on consumer prices for September, which showed the same rapid rate of inflation that has been apparent this year. The Labor Department said the consumer price index rose 0.4% in September, up from 0.3% in August. This means the price level has increased 5.4% in the last 12 months and 6.5% on an annual basis so far in 2021. This is the largest year-over-year increase since 2008, and the details in the report add to the evidence that inflation is likely to be persistent.” (Editorial, “The Inflation Tax Rises,” The Wall Street Journal, 10/13/2021)

Year-On-Year Inflation-Adjusted Wage Growth Is Negative

“Real average hourly earnings decreased 0.8 percent, seasonally adjusted, from September 2020 to September 2021. The change in real average hourly earnings combined with no change in the average workweek resulted in a 0.8-percent decrease in real average weekly earnings over this period.” (Bureau of Labor Statistics, Press Release, 10/13/2021)

THE WALL STREET JOURNAL EDITORIAL BOARD: “[W]orkers are paying the price. Real average hourly earnings… are down 0.8% since a year ago. Real hourly earnings are down 1.9% since January when Joe Biden became President. What the progressive government giveth in transfer payments, it taketh in higher prices and real wage declines.” (Editorial, “The Inflation Tax Rises,” The Wall Street Journal, 10/13/2021)

For Senior Citizens, Social Security’s Cost-Of-Living Adjustment Will Increase By The Largest Amount In Nearly 40 Years, ‘Reflecting Surging Inflation’

“Seniors and other Americans receiving Social Security benefits in 2022 will see the largest increase in their payments in four decades, reflecting surging inflation during the pandemic. Next year’s cost-of-living adjustment, or COLA, will be 5.9%, the Social Security Administration said Wednesday. The increase will translate to an addition of $92 to retirees’ average monthly benefit next year, bringing the amount to $1,657, the agency estimates. The nearly 6% cost-of-living adjustment is the largest since 1982, according to Social Security Administration data. The adjustment is calculated based on the Labor Department’s measure of inflation faced by blue-collar workers.” (“Social Security Benefits to Increase 5.9% for 2022,” The Wall Street Journal, 10/13/2021)

Primary Residence Rent Had Its Largest Monthly Increase In 20 Years

Rent at primary residences grew 0.5% in September, the largest monthly increase since 2001. (Bureau of Labor Statistics, Accessed 10/14/2021)

THE WALL STREET JOURNAL EDITORIAL BOARD: “The September report also included omens of future inflation, notably the rise in housing costs. Actual rents rose 0.5% for the month, while owner-equivalent rents rose 0.4%. The latter is especially important because it makes up nearly a quarter of the CPI, and the increase in housing costs shows up in owner-equivalent rents with a lag. Housing costs have been soaring, with the Case-Shiller index up nearly 20% in a year as of July. This increase will flow into the CPI next year.” (Editorial, “The Inflation Tax Rises,” The Wall Street Journal, 10/13/2021)

Food Prices Continue To Rise As ‘The Cost Of A Meal At A Full-Service Restaurant Has Jumped 5.2% In The Past Year, An Unprecedented Leap For As Long As Records Have Been Kept’

“Food prices continue to be an area of concern, as the food at home index rose 1.2% over the month as all six major grocery store food groups increased in price. Beef prices added another 4.8% in price last month, while the index for meats, poultry, fish, and eggs rose 2.2% over the same period. The index for other food at home increased 1.1% in September, adding to the .6% increase from August. Fruits and vegetables even increased, adding .6% in September, significantly larger than the .2% increase reported in August, according to the BLS.” (“Consumer Price Index: Inflation Won’t Let Up – Food and Gas Prices Rise Again in September,” YahooFinance, 10/13/2021)

“Restaurant owners are paying higher salaries to lure workers who have become elusive in the pandemic and they’re paying more for food. And for the fifth consecutive month, that has led to outsized price gains, 0.5%, in September. The cost of a meal at a full-service restaurant has jumped 5.2% in the past year, an unprecedented leap for as long as records have been kept.” (“From Cars To Gasoline, Surging Prices Match A 13-Year High,” The Associated Press, 10/13/2021)

New Cars Have Seen The Largest Year-On-Year Price Increase Since 1980

“New cars, however, are growing increasingly expensive with costs rising 1.3% in September, and 8.7% compared with a year ago. That is the biggest 12-month increase in new car prices since 1980.” (“From Cars To Gasoline, Surging Prices Match A 13-Year High,” The Associated Press, 10/13/2021)

Furniture And Bedding Prices Had Its Largest Monthly Increase In Over 30 Years And Largest Year-On-Year Increase Since 1951

Furniture and bedding prices grew 2.6% in September, the largest monthly increase since 1988. (Bureau of Labor Statistics, Accessed 10/14/2021)

“Prices for household furniture, which has faced major shipping delays, jumped 2.4% in September alone, the biggest increase since 1988. Over the past 12 months, furniture costs have soared 11.2%, the most since 1951.” (“From Cars To Gasoline, Surging Prices Match A 13-Year High,” The Associated Press, 10/13/2021)

Children’s Shoe Prices Are At A Record Increase Going Back To The 1950s

“The cost of shoes rose 0.5% in September and have jumped 6.5% in the past year. Children’s shoes are up 11.9%, a record-high gain in data that stretches back to the 1950s.” (“From Cars To Gasoline, Surging Prices Match A 13-Year High,” The Associated Press, 10/13/2021)

‘Soaring Energy Prices’ Are Putting A Squeeze On The U.S. Economy: ‘For Consumers It’s Like A Tax’

“The U.S. economy is facing a new threat: rising energy prices. Crude oil has risen 64% this year to a seven-year high. Natural-gas prices have roughly doubled over the past six months to a seven-year high. Heating oil has risen 68% this year. Prices at the pump are up nearly a dollar over the past 12 months to a national average just over $3 a gallon. Coal prices are at records. Higher energy prices could push up inflation in coming months, damp consumer spending on other products and services, and ultimately slow the U.S. recovery, economists say.” (“Soaring Energy Prices Raise Concerns About U.S. Inflation, Economy,” The Wall Street Journal, 10/10/2021)

• “Gas prices jumped 1.2% last month and have soared more than 42% compared with a year ago. Electricity prices rose 0.8% in September from August.” (“From Cars To Gasoline, Surging Prices Match A 13-Year High,” The Associated Press, 10/13/2021)

• “Many analysts believe these factors will push prices up further in coming months. Moody’s Analytics projects oil will rise to between $80 and $90 a barrel by early next year from $79 now and natural-gas prices to $6.50 to $7 per million British thermal units, from $5.5650. JPMorgan Chase & Co. gives a worst-case scenario of oil rising for the next three years and reaching $190 a barrel in 2025. Electricity prices rose 5.2% in August from a year earlier, the largest gain since early 2014, according to the Labor Department.” (“Soaring Energy Prices Raise Concerns About U.S. Inflation, Economy,” The Wall Street Journal, 10/10/2021)

“‘For consumers it’s like a tax,’ economist Kathy Bostjancic of Oxford Economics said of the price increase.” (“Soaring Energy Prices Raise Concerns About U.S. Inflation, Economy,” The Wall Street Journal, 10/10/2021)

• “Energy represents a sizable chunk of consumer budgets. In August, about 7% of consumer spending went toward energy, according to the Labor Department. Historically, high energy prices have often preceded recessions. Consumers can’t easily cut consumption on short notice, as they can with discretionary purchases, so higher prices act as a tax, draining the money they have available to spend on other goods and services.” (“Soaring Energy Prices Raise Concerns About U.S. Inflation, Economy,” The Wall Street Journal, 10/10/2021)

Coal Prices Are Up As Rising Demand Hits ‘Supply Held Back By Carbon Emission-Reduction Plans’

“Coal prices have been pushed up by rising demand colliding with supply held back by carbon emission-reduction plans.” (“Soaring Energy Prices Raise Concerns About U.S. Inflation, Economy,” The Wall Street Journal, 10/10/2021)

Oil And Gasoline Prices Are Up As The Biden Administration Disincentivizes Domestic Production

THE WALL STREET JOURNAL EDITORIAL BOARD: “Oil prices are rising, and the White House is worried about higher gasoline prices for consumers…. Average gasoline prices nationwide have risen 40 cents a gallon in the last six months and $1 since December. The White House blames OPEC for not increasing supply more as demand has rebounded amid the pandemic recovery, but that’s a too-easy scapegoat. Crude oil prices have doubled since November to $83 per barrel, and petro-states want to maintain higher prices to fund their governments. But U.S. producers have also been slower to revive output as the Administration is threatening the oil and gas industry with a panoply of taxes and regulation. Producers aren’t going to drill more wells today, even at today’s higher prices, if they don’t think they will produce future profits…. The way to reduce gas prices is by increasing oil supply. That means not sending policy signals that the Administration’s goal is to put the industry out of business.” (Editorial, “Oil Prices and Bad Policy,” The Wall Street Journal, 10/11/2021)

‘Natural-Gas Prices Have Surged’ While ‘The Number Of Rigs Drilling For Gas Has Been Basically Flat Since Spring’

“Natural-gas prices have surged, prompting worries about winter shortages and forecasts for the most expensive fuel since frackers flooded the market more than a decade ago…. It is supposed to be offseason for demand, and prices haven’t climbed so high since blizzards froze the Northeast in early 2014. Analysts say that it might not have to get that cold this winter for prices to reach heights unknown during the shale era, which transformed the U.S. from a gas importer to supplier to the world. Rock-bottom gas prices have been a reliable feature of the U.S. economy since the financial crisis. Gas crashed and never recovered thanks to the abundance extracted with sideways drilling and hydraulic fracturing. Gas is burned to generate electricity and heat homes and to make plastic, steel and fertilizer. A substantial and sustained increase in price would be felt from households to heavy industry.” (“Natural-Gas Prices Surge, and Winter Is Still Months Away,” The Wall Street Journal, 9/19/2021)

• “The number of rigs drilling for gas has been basically flat since spring despite much higher prices. When prices rose above $5 in 2014, there were more than three times as many rigs drilling gas wells as the 100 operating now, according to Baker Hughes Co.” (“Natural-Gas Prices Surge, and Winter Is Still Months Away,” The Wall Street Journal, 9/19/2021)

• “Similar factors are at play in Europe, where prices have been setting records all summer. In Asia, buyers are paying more than ever for deliveries of liquefied natural gas, or LNG, to sail across the Pacific instead of to Europe. The supply deficit is particularly acute in Europe, where inventories are thin thanks to hot weather, lackluster wind-power generation and lower imports from Russia. Goldman Sachs Group Inc. analyst Samantha Dart said that stockpiles in northwestern Europe have recently been about 24% below average.” (“Natural-Gas Prices Surge, and Winter Is Still Months Away,” The Wall Street Journal, 9/19/2021)

The President Of The Federal Reserve Bank Of Atlanta: Inflation Is ‘Not Transitory’ And It’s Time For The Fed To Start Changing Policy

“Federal Reserve Bank of Atlanta President Raphael Bostic said this year’s inflation surge is lasting longer than policymakers expected, so it’s not appropriate to refer to such price increases as transitory. ‘Transitory is a dirty word,’ Bostic said in a virtual speech to the Peterson Institute for International Economics on Tuesday. He spoke with a glass jar labeled ‘transitory’ at his side, depositing $1 each time he used the ‘swear word,’ as it’s become known to him and his staff over the past few months.” (“Transitory Is ‘Dirty Word’ as Inflation Lasts, Fed’s Bostic Says,” Bloomberg, 10/12/2021)

FEDERAL RESERVE BANK OF ATLANTA PRESIDENT RAPHAEL BOSTIC: “It is becoming increasingly clear that the feature of this episode that has animated price pressures — mainly the intense and widespread supply-chain disruptions — will not be brief… By this definition, then, the forces are not transitory.” (“Transitory Is ‘Dirty Word’ as Inflation Lasts, Fed’s Bostic Says,” Bloomberg, 10/12/2021)

“U.S. inflation is above the Federal Reserve’s 2% inflation target and policymakers need to watch carefully to ensure that pandemic-induced pressures do not cause long-term inflation expectations to become unanchored, Atlanta Fed Bank President Raphael Bostic said on Tuesday. … The policymaker said it is time for the Fed to start withdrawing the support it offered to the economy during the pandemic.” (“Fed's Bostic Says Pandemic Pressures Pose Risks For Long-Term Inflation Expectations”, Reuters, 8/12/2021)

• BOSTIC: “I believe the conditions I’ve described argue for a removal of the Committee’s emergency monetary policy stance, starting with the reduction of monthly asset purchases, as we discussed in last month’s meeting.” (“Fed's Bostic Says Pandemic Pressures Pose Risks For Long-Term Inflation Expectations”, Reuters, 8/12/2021)

Back In May, Bostic Said Rising Inflation Was ‘Healthy’ And Conditions Were Not Necessary To Change Fed Policy

“Atlanta Federal Reserve President Raphael Bostic told CNBC on Monday he’s comfortable with the central bank’s ultra-loose policy even as inflation gains steam in the economy. … In fact, Bostic said he considers rising inflation as a positive sign. He and other Fed officials have written off the most recent price increases as the result of temporary factors that likely will abate later this year.” (“Fed’s Bostic Says There’s No Reason To Change Policy Despite Inflation Fears,” CNBC, 5/17/2021)

BOSTIC “I’m a nervous guy. I’m always thinking about scenarios. Are we staying in our position for too long? But I’m not seeing that right now, and I’m not really thinking that we need to act… I actually think that having a healthy level of inflation is a sign that the economy is healthy, the economy is going to be dynamic and growing and that should translate into jobs for the people who everyone is concerned about at the lower end of the wage distribution…  So [if] we don’t have an economy that gets people employed so they can have jobs and get to a more sustainable trajectory, then we’re going to have a much more difficult problem to face. So, for me, I really take the inflation as a sign of a healthy economy where there is growth, there is innovation, there is value add that’s being provided and that in turn should result in better fortunes for everyone. ... I don’t think we’re going to have answers on this until at least early fall, and it may take longer than that… It all depends on how rapidly we recover.” (“Fed’s Bostic Says There’s No Reason To Change Policy Despite Inflation Fears,” CNBC, 5/17/2021)

Bostic Is A Former Obama Administration Official Who Has Contributed Thousands To Democrats And Is Considered As A Potential Replacement For Federal Reserve Chairman Jerome Powell

“Raphael Bostic, a former Obama administration housing official, was named president of the Federal Reserve Bank of Atlanta, becoming the first African-American selected to lead one of the 12 regional Fed banks in the institution’s century of existence. … From 2009 to 2012, Mr. Bostic served as an assistant secretary for policy development and research at the Department of Housing and Urban Development, a position that required Senate confirmation. He has been at USC since 2001 and is chair of the department on governance, management and the policy process at the Sol Price School of Public Policy.” (“Former Obama Housing Official Raphael Bostic to Lead Atlanta Fed,” The Wall Street Journal, 3/13/2017)

“Raphael Bostic, the newly appointed president of the Federal Reserve Bank of Atlanta, has donated $5,476 to Democrats, including former President Barack Obama and presidential candidate Hillary Clinton, according to information obtained from OpenSecrets. From 2009 to 2012, Bostic worked at the Department of Housing and Urban Development as an assistant secretary for policy development and research in addition to doing work on budget and legislative proposals.” (“Newly Appointed President of Atlanta Fed Donated $5,476 to Democrats,” Washington Free Beacon, 5/13/2017)

“There's been a lot of chatter about who will be the next chair of the Federal Reserve if President Biden decides to replace Jerome Powell when his term ends next year, and much of that chatter has included Atlanta Fed president Raphael Bostic. … It's certainly not a foregone conclusion that Powell will be replaced, but the possibility of Bostic stepping into the role has become a talking point in economics circles and in Washington.” (“Atlanta Fed President Raphael Bostic Is Ready For The Chair,” Axios, 5/24/2021)