The Inflation Bogeyman: Robert Reich
July 14, 2021.
Friends. Youre hearing a lot about inflation these days. Dont buy it. Every time the economy gets a bit of wind in its sails and workers get a little wage increase, conservatives scream about inflation and price increases.
In reality, theres no inflation. The economy still has huge room to grow without pushing up prices. Were still 7 million jobs short of where we were in January 2020. Retail and office space is empty. Factories arent near capacity.
In addition, companies can easily outsource extra production they need. Meanwhile, unions are so weak as to negate the possibility of wage-price inflation. The price increases were witnessing now are because of supply bottlenecks, as supply catches up with pent-up demand.
To the extent we need to worry about anything, its industrial concentration. Too many US industries are dominated by a handful of corporations, which have the ability to push prices higher. That requires antitrust enforcement.
But inflation itself structural, accelerating price increases is a total mythology.
Dont fall for the scare-mongering. -
https://robertreich.org/post/656720415116427264
bahboo
(16,309 posts)good to have this reply...
appalachiablue
(41,102 posts)Mr.Bill
(24,228 posts)But if he thinks there's no inflation he hasn't been in a grocery store for awhile.
Chainfire
(17,458 posts)My local grocer is now offering instant financing on beef. It appears to me that in the last 15 months or so, the price of my groceries have gone up 15-20%.
Being retired with a low fixed income, I am worried about my savings being eaten up by inflation. My modest nest egg is what allows me to sleep at night and it could be wiped out over a few years by inflation.
malthaussen
(17,175 posts)Mein Gott, Doonesbury had a sequence about that very thing back in 1974.
-- Mal
Chainfire
(17,458 posts)You must not have inhaled.
malthaussen
(17,175 posts)... "I just get high on life and America."
-- Mal
appalachiablue
(41,102 posts)Metaphorical
(1,601 posts)there are several key reasons why so much of what you're hearing is just noise:
1. Part of the supply chain issues wrt food come down to there not being enough migrant workers coming to the US due to COVID, or due to not enough truck drivers to transport same. This drove the supply problems through the first part of the year, and significantly reduced stockpiles of corn, rice, etc. This is still a factor, especially in the South and Midwest, which are primary agricultural areas.
2. We're reaching a point where a significant percentage of the workforce is retiring after COVID. Many of these people were close to the end but were hanging on to eke out a few more years for savings purposes, but decided to hang things up after last year. Note that many of these people were also skilled even in "unskilled" labor, and there's no one in the pipeline to replace them.
3. Companies are still hurting financially, and are discovered with everyone now trying to rehire, labor is in the strongest position it's been in decades. Once a company hires a person, increases in wages tend to become much slower, and this creates an inelasticity that sets expectations moving forward, but it usually gets disrupted when you have to hire someone new. People are now reassessing their needs as they re-enter the labor force, and are coming to the conclusion that they weren't making ends meet on previous wages. This is healthy for the economy, but investors hate it because it's eating away at juicy dividend payments.
4. Much of the inflation pressures that you're seeing are also relative - oil prices are returning to where they were before the Pandemic as demand rises, but relative to the last quarters oil prices are jumping dramatically. Many outlets talk about annualized inflation, basically by taking a month or a quarter then projecting it out to the whole year, but things should even out by this time next year as we get back to a "normal" baseline.
5. Finally, there are the political aspects. Fiscal conservatives see inflation, and they immediately tie it into stimulus spending, because that is money that ISN'T going to them. You'll notice that these were the same groups that said NOTHING when the GOP pushed the 2017 tax cuts down everyone's throats, which produced a small bump in economic activity but mainly went into making stock buybacks feasible for corporations, concentrating the investment pool.
The libertarians are now all saying that another stock market collapse is imminent because the damned Democrats are now in charge of the economy and are now squawking loudly about inflation and the national debt, despite being absolutely silent about either of these issues during the last four years.
I'm not even sure I see more than a mild correction in the stock market any time soon - the COVID recession wiped out a lot of malinvestment very, very quickly, and frankly it's going to take a while for instabilities in the market to remanifest themselves - but to hear the noise from the right-wing financial media, we're going to see everything collapse next week.