Last year closed out with an annual 7% inflation rate, the Bureau of Labor Statistics finally announced Wednesday. That price increase, further fueled by a 0.5% increase in December alone, constitutes the highest inflation rate since 1982 when Paul Volcker had to engage in a recession-inducing interest-rate-hike campaign just to crack down on the catastrophic stagflation of the 70s.
To put this into more practical terms, the average U.S. worker earns 26 paychecks a year on a biweekly pay schedule. Inflation in 2021 effectively wiped out nearly two of those 26 paychecks. Suffice it to say, the devastation of inflation is not evenly distributed, and as usual, the data demonstrate the damage is regressive.
Across categories, inflation has disproportionately stung lower-income earners. Whereas the inflation rate of services has held near the 2% benchmark the Fed usually considers normal, the prices of energy, food, and goods have skyrocketed.
Gas prices are up nearly 50% from this point last year, and electricity is up more than 10%. Food is up 6.3% in no small part due to the price of meats, poultry, fish, and eggs — these are often the healthiest protein options for lower-income households — increasing by nearly twice the overall food rate.
The Fed’s decadelong zero-interest rate and its radical quantitative easing contributed to this problem. But the ramifications of Joe Biden’s fiscal and regulatory policies are also evident in the numbers.
Across industries, the worker shortage is partially caused by Boomers choosing to retire early rather than return to an unsteady job market and by parents stuck balancing onerous school coronavirus protocols and closures forced upon them by teachers unions. Through the Environmental Protection Agency, the Biden administration has also instituted a number of regulations, ranging from biofuel mandates to stricter truck emissions standards that have increased costs and exacerbated shortages, especially as it pertains to food.
Biden also reversed the Trump-era policies in 2019 that allowed us to export more petroleum than we imported for the first time in nearly half a century. Biden nixed the Keystone XL pipeline and suspended a number of oil leases, reminding domestic oil producers they are on the chopping block for his climate agenda. He also suspended sanctions on Russia’s Nord Stream 2 pipeline, a victory for an emboldened OPEC-plus. Although his administration has made a recent about-face, urging domestic producers to increase supply, the market remains wary of the regulations his radical advisers will come up with next.
Sure, the pandemic may play a small part in this, but ask yourself why the food shortages never got this bad in 2020. Ask yourself why oil output was actually higher in 2020 than it was last year.
Yes, our current inflation crisis owes something to the post-Great Recession monetary policy, but the pain felt now by the working class is the result of pure Bidenomics.
