To investors, Inflation in the United States was reported at 8.6% this morning. This is the fastest year-over-year growth in over 40 years. The most concerning part of this report is that economists and market analysts believed that inflation had peaked in March at 8.5% and was going to start trending downward in April and May.
If you believe in free markets inflation will correct itself. The problem is there really aren’t ‘free markets’, with so much of the market infrastructure hampered by the mechanisms that allow free markets to flourish. Trade wars, tariffs, compounded by a world wide pandemic shutting down Shanghai China and the shipping industry. America lost one million souls. Our childcare & schools have been severely disrupted, pulling many parents out of the workforce to care for their children. Fewer workers available, sinking unemployment numbers to record levels. Immigration has been stifled, as has seasonal migrant labor. Produce has gone unharvested and rotting in fields the past few years, when farmers couldn’t access their regular seasonal workers, mainly from the countries the last president vilified. So many systems we have relied upon are disrupted. The war Russia waged upon Ukraine is causing a hardship worldwide, as Ukraine is the breadbasket of Europe. The cost of grains are going up, which will translate to the pasta dish at your favorite Italian restaurant will be 15% higher cost to you. Since Russia is cut off from the rest of the world due to one crazy man’s kleptocracy, the price of gas is double what it once was just 2 years ago. Gas is a supply & demand issue. Remember when the US highways looked like driving through a ghost town, due to COVID-19 shutting down the airlines, and anything where the public might gather? Nursing homes were stacking bodies like cordwood. It was a nightmare. Bankruptcies of restaurants were the norm in 2020 & 2021. Now those trying to reopen cannot find the staff. All this feeds inflation. Not to mention, wages were stagnated for the past 20 years. Suddenly, the worker’s best lever to get a wage increase is to jump ship for another company. Who has the answers to tame inflation? Well, individually and collectively the consumer will decide what they are willing to pay for goods and services, and what they are willing to change in their own lives to combat the increases in everything from rent to gas to pasta. It’ll take time.
If you believe in free markets inflation will correct itself. The problem is there really aren’t ‘free markets’, with so much of the market infrastructure hampered by the mechanisms that allow free markets to flourish. Trade wars, tariffs, compounded by a world wide pandemic shutting down Shanghai China and the shipping industry. America lost one million souls. Our childcare & schools have been severely disrupted, pulling many parents out of the workforce to care for their children. Fewer workers available, sinking unemployment numbers to record levels. Immigration has been stifled, as has seasonal migrant labor. Produce has gone unharvested and rotting in fields the past few years, when farmers couldn’t access their regular seasonal workers, mainly from the countries the last president vilified. So many systems we have relied upon are disrupted. The war Russia waged upon Ukraine is causing a hardship worldwide, as Ukraine is the breadbasket of Europe. The cost of grains are going up, which will translate to the pasta dish at your favorite Italian restaurant will be 15% higher cost to you. Since Russia is cut off from the rest of the world due to one crazy man’s kleptocracy, the price of gas is double what it once was just 2 years ago. Gas is a supply & demand issue. Remember when the US highways looked like driving through a ghost town, due to COVID-19 shutting down the airlines, and anything where the public might gather? Nursing homes were stacking bodies like cordwood. It was a nightmare. Bankruptcies of restaurants were the norm in 2020 & 2021. Now those trying to reopen cannot find the staff. All this feeds inflation. Not to mention, wages were stagnated for the past 20 years. Suddenly, the worker’s best lever to get a wage increase is to jump ship for another company. Who has the answers to tame inflation? Well, individually and collectively the consumer will decide what they are willing to pay for goods and services, and what they are willing to change in their own lives to combat the increases in everything from rent to gas to pasta. It’ll take time.
Yes, but... https://plus.econvue.com/p/peak-uncertainty-econvue-june-2022?r=co&s=w&utm_campaign=post&utm_medium=web