On the menu today: On Monday, I told you that, “We don’t know what the exact updated inflation figure will be, but we know the number isn’t likely to be particularly good news.” This morning, inflation came in at 8.2 percent year-over-year, with similar grim numbers in the month-over-month measurements. There will not be any last-minute burst of good economic news to save Democrats’ bacon in the midterm elections. Then again, maybe I shouldn’t use that metaphor, because the cost of a pound of bacon has increased from $5.58 to $7.37 since 2020.
Welcome to Inflation Day
Man, you need an electron microscope to spot any silver lining in this morning’s inflation numbers.
At the beginning of the week, I told you this would be the week before the midterm elections that is most dominated by a focus on the economy and inflation, because of the release of the updated Consumer Price Index figures.
This morning, the U.S. Bureau of Labor Statistics dropped the latest round of bad news:
The Consumer Price Index for All Urban Consumers rose 0.4 percent in September on a seasonally adjusted basis after rising 0.1 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased 8.2 percent before seasonal adjustment.
Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase. These increases were partly offset by a 4.9-percent decline in the gasoline index. The food index continued to rise, increasing 0.8 percent over the month as the food at home index rose 0.7 percent. The energy index fell 2.1 percent over the month as the gasoline index declined, but the natural gas and electricity indexes increased.
The index for all items less food and energy rose 0.6 percent in September, as it did in August. . . .
Bad, bad, bad, bad, bad. University of Michigan economics professor Justin Wolfers is a pretty darn straight shooter in his assessments of the economy, and his instant reaction didn’t sugarcoat it, for those who were hoping to get a burst of good economic news about a month before the midterm election:
Inflation is proving to be more resilient — and more troubling — than many had hoped or forecast. Both the headline and core inflation readings are about 0.2 percentage points higher than expected. That might not sound like a lot, but over a month, it’s a pretty big miss. Worse, it comes after a run of disappointing inflation readings. There’s nothing in this report that folks at the Fed are going to cheer. Even as nominal wage growth remains contained, inflation continues to run at troubling rates. Remember, the Fed is focused on core rather than headline inflation, and core is a more dismal story.
One year ago, in September 2021, the U.S. inflation rate was 5.4 percent, continuing a stretch of steadily high, but not quite astronomically high, inflation rates that had begun in April. By November, the rate had jumped to 7.8 percent, the largest year-over-year jump since 1982, and we knew we were entering once-in-a-generation territory. This September’s prices are 8.2 percent higher than those prices, which were already 5.4 percent higher than September 2020’s prices. In other words, we’re now well into our second year of exceptionally high inflation. For 19 straight months, the inflation rate has been higher than it was a year earlier.
CNBC reported that economists had expected the CPI to have risen 0.3 percent, up from 0.1 in August, and offered an ominous quote from Diane Swonk, KPMG’s chief economist:“The core inflation is going to be higher, so it’s still an inflation that hasn’t peaked yet in many ways. There’s still more risks of supply side shocks.”
Yesterday brought the update to the Producer Price Index, a less-discussed figure that measures the prices that suppliers are charging businesses and other customers. That number increased 0.4 percent from this August to this September, and 8.5 percent from last September to this September.
If inflation is cooling, you shouldn’t be seeing big jumps in the PPI number or the CPI number. You know that a lot of people wanted to see some glimmer of hope in those numbers, both for the sake of the country and for the sake of Democrats’ hopes in the midterms. But CNBC’s Jim Cramer couldn’t find a silver lining yesterday:
“It was just plain bad. There’s absolutely nothing to say about it other than it was bad. A lot of people were hoping this number’s going to be good, maybe accepting that tomorrow’s going to be bad,” he said on CNBC’s Squawk Box. “The only thing that’s actually even remotely positive about it is that there’s nothing that’s really shocking to the upside, it’s just kind of as bad as it’s been.”
“There’s no relief here . . . there’s just nothing good here,” he added.
All of this makes for a target-rich environment for Republican challengers to Democratic incumbents. You can picture the ad and debate lines already: The so-called Inflation Reduction Act was signed in August, and so far, it’s not doing a darn bit of good. The economy was already recovering in early 2021, and then Joe Biden, Chuck Schumer, Nancy Pelosi, and the rest of the Democrats decided to throw another $1.9 trillion in cash into the economy — too much money chasing too few goods, driving prices up. Biden said in July 2021 that inflation was going to be temporary, and he declared in December that inflation had peaked, and he said in February that it would “taper off.” He doesn’t know what the hell he’s talking about. He just keeps telling us to be patient and that things will get better. That’s not optimism; that’s stubborn denial. The Democrats always want to spend their way out of a problem, and when you’re in an inflation crisis, that’s like pumping gasoline onto a raging inferno. Just this month, Gavin Newsom started sending out $1,050 checks to California residents to “help with inflation.” That makes the problem worse! When too much money is chasing too few goods, giving people more money only drives the prices up further!
By the way, this morning in Politico, Victoria Guida begins her piece with, “Officials at the Federal Reserve and in the Biden administration are seeing promising signs that the U.S. might finally be through the worst of inflation.”
Are they?
Yesterday, the Associated Press released a new poll revealing that 46 percent of Americans now call their personal financial situation “poor,” up from 37 percent in March. For perspective, in March 2020, as the Covid-19 pandemic was shutting down American society, 38 percent said their personal financial situation was poor — and that number actually improved slightly in the subsequent months. Now, just 23 percent of respondents say they feel the U.S. economy is “good,” and intriguingly, “The drop since September came primarily among Democrats, from 46 percent then to 35 percent now.”
In other words, even the people who are most instinctively sympathetic to the argument that the economy is doing well aren’t buying the happy talk coming from the White House. Not that President Biden is changing his approach.
On Tuesday, Biden was interviewed by CNN’s Jake Tapper, and he scoffed at JPMorgan Chase CEO Jamie Dimon’s assessment that the U.S. is either already in a recession or will enter one in the near future.
“Look, they’ve been saying this now how — every six months, they say this,” Biden said. “Every six months, they look down the next six months, and say what’s going to happen. It hadn’t happened yet. It hadn’t been — there has — there is no — there’s no guarantee that there’s going to recession.”
As you probably know, the U.S. has experienced two consecutive quarters of negative GDP growth, which for a long time was the traditional definition of a recession.
Biden continued, “I don’t think there will be a recession. If it is, it will be a very slight recession. That is we’ll move down slightly. . . . It is possible. Look, it’s possible. I don’t anticipate it.”
The president didn’t anticipate 19 months of high inflation, either.
Yes, Why Is January 6 Such a Non-Issue in the Midterms?
Stephen Collinson is quite irked that Americans are more worried about inflation and grocery prices than the events of January 6 and the continuing nonsensical claim that Donald Trump was the real winner of the 2020 presidential election. Collinson writes over at CNN:
Grocery bills are just a pain right now. Frozen potato products are up 10 percent, pork products that are not sausages are 5.5 percent more expensive. While it would be too simplistic to say voters are more preoccupied with the cost of French fries than the price of democratic freedoms, it wouldn’t be far from the mark.
What are we to make of the fact that Democrats are choosing not to focus on January 6?
Per Politico:
. . . criticism of the 139 House Republicans who voted to challenge Trump’s loss on Jan. 6, 2021, has been all but absent from the TV airwaves with 25 days to go before the midterms. Just a handful of them are in close races, where they’ve faced questions about their election objection in debates, social media and smaller-scale ads. Democrats view that as part of their larger focus on “extremism.”
Overall, less than 2 percent of all broadcast TV spending in House races has gone toward Jan. 6 ads, according to ad-tracking firm AdImpact — or just $2.7 million of $163 million. Taken in total, Democrats have aired just two dozen spots focused on threats to democracy this cycle, in roughly 16 different battleground districts.
Democrats can read polls, and they can conduct focus groups. Democrats are trying to figure out what is foremost in the minds of voters, just like Republicans are. If Democrats don’t think it’s worthwhile to focus on January 6 as the country experiences its second year of runaway inflation, why should anyone else?
ADDENDUM: Just clarifying a point from yesterday’s Jolt: Within three years of becoming mayor of Braddock, Pa., the national and even international media came to the small (roughly 2,900 residents in 2000) town, fascinated and eager to share the tale of the unusual-looking mayor, John Fetterman.
Fetterman was elected mayor in 2005 and took office in January 2006. By the first day of February 2009, the New York Times published its generous profile, about how a “political novice is starting to shake things up.” By the end of February, Fetterman was making his first appearance on The Colbert Report. By mid March, CNN’s American Morning had done a profile of Fetterman and his efforts to turn around the town.
By April, Fetterman was testifying before Congress with the Environmental Defense Fund, calling on Congress to pass climate-change legislation. (In April 2009, how concerned were Braddock residents about climate change?) By May 2009, Rolling Stone published its profile of Fetterman, featuring the line, “How many small-town mayors look like a skinhead but claim to be a warrior for social justice? — yet Fetterman insists he hates the spotlight.” And by July, the Guardian was calling him “the coolest mayor in America.”
Within six months, Fetterman went from just another obscure, first-term, small-town mayor to being the subject of profiles in some of the biggest publications and shows in America. First, when that happens, don’t tell me you hate the spotlight. Second, that doesn’t just happen. Either Fetterman had an exceptional pitch to journalists and television producers — “He looks like a skinhead, but he’s a social justice warrior” — or someone decided he was going to be the next big star in Pennsylvania politics.