President Joe Biden and First Lady Jill Biden watch fireworks from the Blue Room Balcony of the White House, Sunday, July 4, 2021, during the Fourth of July celebration on the South Lawn. (Official White House Photo by Adam Schultz)
Joe Biden and the Federal reserve are complicit in the soaring inflation facing Americans this year. The Fed’s ultra-low interest rates for so long have facilitated extreme spending by Biden & Co. The Wall Street Journal’s Gwynn Guilford reports on the damage being done, writing:
U.S. inflation reached a nearly four-decade high in November, as strong consumer demand collided with pandemic-related supply constraints.
The Labor Department said the consumer-price index—which measures what consumers pay for goods and services—rose 6.8% in November from the same month a year ago. That was the fastest pace since 1982 and the sixth straight month in which inflation topped 5%.
The so-called core price index, which excludes the often-volatile categories of food and energy, climbed 4.9% in November from a year earlier. That was a sharper increase than October’s 4.6% rise, and the highest rate since 1991.
The increase in prices for new vehicles, which came in at 11.1% in November, was the largest on record, as were those for men’s apparel and living room, kitchen and dining room furniture. A 7.9% surge in fast-food restaurant prices last month marked the sharpest on record too.
The steady rise in restaurant prices during the past few months is a sign of pass-through from wages into higher prices, economists say. That dynamic is increasingly showing up in other industries. Wages tracked by the Atlanta Fed climbed 4.3% in November, up from 4.1% in October and the highest since 2007.
Some energy prices showed signs of easing—in part because of fear in the financial markets that the Omicron variant of Covid-19 could slow growth. But gasoline rose at a 6.1% monthly rate for the second straight month.
The November prices trend came before the emergence of the Omicron variant, which poses a new threat from a pandemic that is well into its second year. But the sharp price increases are the result of a booming economy that has developed imbalances in supply and demand as the U.S. continues to recover from the pandemic.
“We have tremendous spending by consumers. A lot of people are getting hired. Demand is huge,” Allen Sinai, chief global economist and strategist at Decision Economics, Inc. said. He added that higher-than-expected inflation implies a needed pullback in fiscal and monetary stimulus. “Even after doing that, the economy should still be in super shape producing growth rates and earnings not seen in decades.”
On a monthly basis, the CPI increased a seasonally adjusted 0.8% in November from the prior month, about the same as October’s 0.9% increase.
The latest strong inflation report strengthens the case for Federal Reserve officials to commit to hastening the wind-down of their stimulus efforts, paving the way to raise interest rates in the spring to curb inflation.
