Rep. Jason Smith, R-Missouri, said on “Kabuto: Coast to Coast” that inflation has increased by 19.4% since Joe Biden took office.
So these three middle-aged men go for their annual checkups. They receive terrible news. They have high blood pressure and bad cholesterol, and an additional two pounds would officially classify them as “severely obese.” Doctors say that although she is fine now, her future is not bright.
The first guy tells himself it’s not that bad. He tells himself that this is just a temporary thing, that he probably spent too much time eating all he could on his last trip to Las Vegas, and that he’ll be fine once things get back to normal.
The second man returns home and tells his wife that he needs her to help make things right. I might save the bacon and eggs for the weekend. But then, of course, he sat in his recliner with a bag of chips, grabbed her remote, and asked her to bring him a beer.
US consumer sentiment declines more than expected due to rising inflation concerns
A third man pulls out a photo of his two-month-old granddaughter and vows to change. Six months later, he’s at the gym exchanging salmon recipes with a workout buddy.
Inflation is rising again, with March marking the 36th consecutive month in dangerous territory. FILE: Shoppers are seen at a Kroger supermarket on October 14, 2022 in Atlanta, Georgia. (ELIJAH NOUVELAGE/AFP via Getty Images)/Getty Images)
The latest inflation figures mean the US is one of those countries. In fact, we were among those people for a while. The Fed considers inflation above 2% unhealthy. The consumer price index in March was 3.5%. We’ve been in that danger zone for 36 consecutive months. Even worse, the numbers are going in the wrong direction. Inflation in March was higher than February and higher than January.
Until early 2024, there were at least some economists similar to the first person. Yes, they said inflation is bad, but it’s only temporary – pandemic hangover, oil market anomalies, bird flu, etc. – and it will go away eventually. Some of them still believe in it, but no one else does. There is too much evidence to pretend this will go away on its own.
Most of our politicians act like second men, except their long-suffering wives are the Federal Reserve. As far as I can see, no government — and this is truly a bipartisan failure — has a consistent, concrete policy to combat inflation other than telling the Fed to deal with it.
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And of course, they also want beer and chips. The Fed is somehow supposed to magically design interest rate policy that suppresses inflation without burdening voters who prefer low interest rates.
Larry McDonald, founder of the Bear Trap Report, weighed in on the White House’s response to the US economy, claiming that Biden is trying to “influence” the Federal Reserve.
And even if the Fed remains tough and refuses to cut rates, there is no guarantee that it will be enough. There are many other macroeconomic issues besides interest rates. Promising the Fed to keep cutting rates is like promising to quit drinking while smoking two packs a day.
But what about the third guy? Is it possible that the bad news about inflation will make us think about our grandchildren and commit to doing something actually helpful? There’s no sign of that yet, but let’s hope. Inflation makes voters unhappy. Perhaps some politicians would think it’s worth trying an actual coherent program, one that runs the risk of making voters unhappy about a lot of things.
And make no mistake. Inflation is not inevitable. Economists prefer to disagree. Most of us would say there are some things that help.
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Let’s stop being stupid first
There are many policies that help a few people, but come at a huge cost to the rest. One study found that steel tariffs cost U.S. consumers $900,000 for every job saved. There are many such things in the world. They all increase prices.
The Fed is somehow supposed to magically design interest rate policy that suppresses inflation without burdening voters who prefer low interest rates.
Next, manage your budget
Since the beginning of 2020, the federal budget deficit has increased by more than $10 trillion. Economic theory and common sense tell us that spending must cause prices to rise. You can either pay for that expense or cut back on it.
Few people spend much time thinking about their blood pressure or the latest numbers from the Bureau of Labor Statistics. Sometimes we are forced to face harsh realities. Let’s see how we react.
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Michael L. Davis is Professor of Economics in the Cox School of Business at SMU Dallas.
