Almost everything is more expensive than it was last month.
Almost everything is more expensive than it was last month.
That’s the upshot of the Bureau of Labor Statistics’ Consumer Price Index summary released on Wednesday morning. The price of used cars and trucks declined by 1.2 percent in August, and the cost of commodities (save essentials such as food and energy) declined by an all but unnoticeable one-tenth of 1 percent. Although the cost of some necessities such as gasoline and fuel oil ballooned in August by roughly 10 percent, most of the price hikes were relatively modest. Still, those price hikes are across the board, including fundamentals such as food, clothing, shelter, and transportation, and they are cumulative — compounding the already high price of goods.
“We learned this morning that core CPI inflation in August was much higher than in June or July,” American Enterprise Institute senior fellow Michael Strain observed. “That is not progress.”
The BLS’s second consecutive report indicating that the rate of consumer-price growth is accelerating again casts the celebrations in which Democrats engaged over the summer in stark relief. As consumer prices began to decline in the late spring, the Biden administration indulged in reckless exuberance, drew a straight-line projection into 2024, and readied itself to be garlanded with laurels by the grateful voting public.
“Inflation is down by two-thirds over the past year,” White House Council of Economic Advisers chair Jared Bernstein crowed in June. “It is particularly notable and highly consistent with Bidenomics to see this steep a decline in the rate of inflation while employment remains so uniquely strong.”
“The economy is defying predictions that inflation would not fall absent significant job destruction,” National Economic Council director Lael Brainard averred.
The president agreed with his advisers. “This is Bidenomics in action,” he said triumphantly in a speech timed to coincide with the release of data showing a decline in the rate of inflation. Not only are prices growing at a slower pace, Biden added, “wages for the average American worker are now higher than they were before the pandemic, with lower-wage workers seeing the largest gains.”
The press took its cues. The data indicating that prices, which had increased steadily since 2021, were growing at a slightly more lethargic pace prompted Reuters to assess that the U.S. had entered a period of “disinflation.” The political implications were made explicit by Washington Post reporter Jeff Stein, who advised Republicans to moderate their rhetorical attacks on Biden’s economic record. A GOP message focused on the rising cost of goods “may no longer be as powerful” when that phenomenon abates.
By summer’s end, however, the exuberance had faded, and Bidenomics’ boosters shifted from touting economic metrics to arguing that voters had succumbed to a false consciousness.
“To hear Republican presidential candidates describe the US economy, you’d think it was in a deep recession, with growth and productivity choked off by President Joe Biden’s policies,” CNN’s Allison Morrow marveled. “The reality is decidedly less bleak — and far more nuanced.” How? Well, the economy is expanding — which would be desirable if it suggested the Fed’s efforts to cool the overheated economy weren’t working. The job market is hot and workers can name the price of their labor — which would be valuable if it didn’t indicate that high rates of demand remained high, contributing to more capital in the market chasing after too few goods. And, of course, inflation “while still painfully high, is cooling.” We’re confronted here not with a “despite” but a “because of,” and this vicious cycle may be perpetuating itself.
In Stein’s brushback pitch aimed at Republicans, the WaPo scribe correctly observes that voters’ impressions of the economy tend to become fixed long before they cast their ballots. If the economy is bad six months out from an election, voters’ views on the state of the economy won’t be altered by a handful of positive reports on the election’s eve. That understanding explains the frantic efforts from Democrats and their allies to retail the narrative that the economy is, in fact, strong. But the data are not cooperating, and the window to shape voters’ economic outlook is rapidly closing.
In September 2022, Joe Biden threw himself a party on the White House lawn to celebrate the terminal decline in prices that the so-called Inflation Reduction Act was supposed to produce. Folk artist James Taylor accompanied the event. Obscure social-media influencers were on hand, taking selfies with the president and reveling in his accomplishments. It all looked rather gauche at the time, but Republicans would be deprived of the opportunity to capitalize on this tone-deaf affair if prices did, in fact, decline over the following 24 months. It was a big bet — one that seems likely to bust. We can expect to be reminded of Biden’s inflation party when it finds its way into 30-second spots backed by six-figure ad buys in the very near future.