Many Americans are struggling to confront the reality of rising prices.
Inflation keeps soaring. The latest number for consumers pegs it at an 8.6 percent yearly rate in May. Worse, the Producer Price Index, the costs for domestic producers, rose at a yearly 10.8 percent rate the same month. The PPI usually reflects future consumer prices.
Some fear that with the highest inflation in 40 years, the issue will continue to get worse for family budgets that are already stretched to the breaking point.
To fight inflation, the Federal Reserve Board on June 15 raised interest rates another 0.75 percentage points. That was on top of earlier rate increases that put the new rate at between 1.5 and 1.75 percentage points. The Fed is attempting to tame inflation without sparking a recession. But similar attempts in the past have resulted in poor economic repercussions.
The housing market is already being hit hard by the new inflation numbers. The U.S. Commerce on June 15 reported May housing starts dropped to 1.55 million, down 14.4 percent from the year prior and the lowest since April 2020 at the beginning of the COVID-19 pandemic and its lockdowns.
Analysts are giving most blame to President Biden’s American Rescue Plan, passed last year by the Democratic U.S. Congress. It sent $1.9 billion in excess spending surging through the U.S. economy, artificially increasing demand. When demand increases, prices usually follow.
Also catching blame are such actions as the president’s cancellation of the Keystone XL pipeline, which restricted the supply of oil, leading to the doubling of gas prices at the pump.
Historians also are comparing the problem to the 1970s “stagflation” economy, meaning stagnation plus inflation, under Democratic President Jimmy Carter. That ended only when Fed Chairman Paul Volcker greatly increased interest rates and President Reagan was elected in 1980 and cut taxes and regulations.
- Michelle Steel’s New Bill Seeks to Protect Low Income Families and Small Businesses From New IRS Audits - October 28, 2022
- President Biden Speaks To Californians About Inflation While Residents Experience Record Highs For Cost-of-Living - October 27, 2022
- Digital License Plates Legalized in California - October 27, 2022