From groceries to gasoline, prices are higher almost everywhere these days. Last month, the consumer price index rose 5% from a year earlier, which is the highest jump since 2008. There are a variety of reasons for these rising prices, many of which are industry specific. However, it’s important to remember that big government spending is only making the problem worse.
Having been a real estate developer for around 40 years, I see firsthand the effect inflation has had on residential construction, for example. According to the Federal Housing Finance Agency, home prices have risen over 12% in the year ending in February, and there are currently more than 240,000 authorized homes that have yet to begin construction. Demand is through the roof, no pun intended.
If there is demand, why are homes not being built?
Short answer: because rising construction prices have made the cost of these homes unaffordable for many homebuyers. For the first time since 2008, the Associated General Contractors of America issued a Construction Inflation Alert. Lumber prices are up over 200% year over year, steel prices are astronomically high, and the cost to pour concrete is almost unbearable. According to the AGCA, residential construction spending jumped 21% for the year ending last January. Now, however, with incredibly high building prices, many developers have no choice but to sit on empty lots, denying new homeownership to countless people.
Whether we’re talking about housing, cars, clothing, utilities, or any other goods or services we need, the rising prices we see today will only get worse if the federal government continues to pump trillions of new spending into our economy.
Throughout our nation, a post-pandemic recovery is already underway. Businesses are picking up steam, life is getting back to normal, and people are ready to spend. On the heels of a pandemic, these factors by themselves are responsible for a significant amount of inflationary pressure.
Meanwhile, President Joe Biden and congressional Democrats are working hard to infuse trillions of dollars in additional federal spending, above and beyond what it normally costs to operate the federal government, all under the guise of COVID-19 relief. Let me be clear: This spending is misguided given the organic recovery that’s already underway.
If the federal government continues to pour trillions of additional (mostly borrowed) dollars into our economy, those funds must compete for the same labor, materials, and other resources that people and the private sector need to continue our recovery. The result will be even higher inflation, perhaps returning to levels we have not seen since the dreaded 1970s.
Given where our economy is today, the Democrats’ objective to infuse historic levels of new federal funds into our economy is reckless at best, if not dangerous. They can no longer hide behind the guise of COVID-19. While warnings of our economy overheating are coming to fruition, this administration’s plan to combat inflation is virtually nonexistent.
The sky is no longer the limit for the Democrats’ spending. In fact, they’re now flying too close to the sun.
Ralph Norman represents South Carolina’s 5th Congressional District in the House of Representatives.
