Breitbart Business Digest: In Biden’s America, Inflation Acts to Reduce You

You almost have to feel sorry for the Biden White House. After the sweepingly spendthrift climate change-Obamacare subsidy-corporate tax hike legislation Congress passed under the absurd title of the Inflation Reduction Act and the probably illegal student loan cancelation, they n0 doubt felt things were finally going their way.

August had been a good month, no doubt. The inflation figures for July that were reported in early August could at least plausibly be described as going in the right direction. The strong July and August jobs reports pushed back fears of a recession until after the midterm elections. Gas prices kept plunging week after week. Consumer sentiment was still down in the ditch, but it was slowly climbing toward the light.

So it must have seemed like an almost inevitability that the inflation numbers would come in very favorably. Wall Street analysts forecast that the Consumer Price Index (CPI) would decline by 0.1 percent, the first decline since May of 2020. Core inflation, which excludes fuel and food, was forecast at 0.3 percent compared with the prior month. That was not actually an improvement from July, but at least prices weren’t accelerating further. Sure there might still be too much foodflation, but those gasoline prices were sure down a lot.

One of our themes over the past year and a half has been the denial of inflation’s reality. Instead of seeing it as a fundamental problem of our economy, the Biden administration and its cheerleaders in the establishment media have consistently treated inflation as an aberration that was likely to fade real soon now. The White House has never been able to come to grips with the fact that throwing nearly two trillion dollars of stimulus on a growing economy last year—roughly nine percent of that year’s Gross Domestic Product—gave rise to an inflationary atmosphere that will persist until it is forcibly stamped out by a combination of restrictive monetary and fiscal policy.

President Joe Biden went to Boston’s Logan Airport on Monday night to preemptively declare victory over inflation. They did not actually drape a banner reading “mission accomplished” behind the president, but that was the message. “The American people should have confidence that we’re on the right track, that we’re seeing real progress,” Biden said.

Someone at the White House decided it would be a good idea to invite James Taylor over on Tuesday to celebrate the Inflation Reduction Act, an act of deep hubris. Many on Wall Street saw this as such an improbable act of overconfidence that they assumed someone must have leaked bad information about the upcoming CPI data to the White House. Perhaps a saboteur in the Bureau of Labor Statistics (BLS), one financier suggested to us on Tuesday. We think it is more likely that the White House just let its winning-streak get the better of it and that the Biden administration may be entirely too gullible when it comes to Wall Street analyst projections.

Reality did not care if it was not invited to the White House’s celebration of the end of inflation. The BLS reported that CPI rose one-tenth of a percentage point, which is not a huge amount, but it was directionally important. Instead of July’s “unchanged” reading representing a turning point from rising prices to stable prices, it now looks like a head-fake. Prices are rising once again. What’s more, once the decline in energy prices are excluded—the measure we’re calling foodcore—prices were up 0.6 percent. Core inflation was also up 0.6 percent, twice what was expected.

Grocery store inflation, one of the most important measures when it comes to consumer confidence and expectations, was up 0.7 percent for the month. Compared with a year ago, households are spending 13.5 percent more for the same food they were buying last year. Electricity prices rose another 1.5 percent, for a a 15.8 percent year-over-year gain. New car prices were up 0.8 percent in August and were up 10.1 percent compared with last year. Used car prices mercifully declined but by only 0.1 percent, far less than expected.

Median inflation, as calculated by the Federal Reserve Bank of Cleveland, accelerated to a record pace. This is considered one of the best measures of underlying inflation because it drops the distorting outliers and looks into the heart of monthly price changes. It was one of the favorite barometers of inflation of team transitory in the early stages of the current price crisis, as Larry Summers recently pointed out.

Median inflation used to be a favorite indicator for team transitory. This month it was at its highest ever reading.

— Lawrence H. Summers (@LHSummers) September 13, 2022

Jason Furman, the Obama administration economic advisor who is now a Harvard professor, characterized the median inflation reports as “extremely ugly.”

The median CPI, which excludes all the large changes in either direction and is better predicted by labor market slack, is out and is extremely ugly. A 9.2% annual rate in August, the single highest monthly print in their dataset which starts in 1983 (second highest was in June). pic.twitter.com/4W6XDLdJXA

— Jason Furman (@jasonfurman) September 13, 2022

Inflation is everywhere in the CPI report. You have to search hard for categories of goods or services that are not registering rising prices. We’re a long, long away from the inflation of last year, when team transitory and the Biden administration could plausibly argue that rising prices were being driven by just a few outlier categories. The breadth of inflation in the August CPI tells us that inflation is not going away anytime soon.