inflation

Bidenflation.

17

That's what Trumpsters call it.

Is there any truth in those claims?

For more information see here.

Inflation is not just in USA. Nothing to do with Biden!

Us-inflation-why-so-high-what-we-know

Lauren Aratani

Wed 13 Jul 2022 18.52 BST

I have added some material in italicised text. The bolding is also mine.

Inflation in the US is at a 40-year high – an astounding 9.1% year-over-year, according to a government

report released Wednesday.

Prices have climbed every month, while consumer confidence has hit record lows. Inflation is now a top concern for many Americans, and is likely influencing many voters in a midterm election year. Trumpster GOP members are calling it "Bidenflation". Is there any truth in this?

What is driving this inflation, however, is not new: rather, it is largely the fallout of two years of the Covid-19 pandemic. Here is what we know.

Why is inflation in the US so high?

"Vlad the Invader" strikes.

A compounding factor which triggered considerable worldwide spikes, adding to already higher rates was the declaration of a "Special Military Operation", actually a WAR on Ukraine by Vladimir Putin.

The effect of Covid 19.

This had a number of linked effects.

The Covid-19 pandemic strapped the US economy on to a rollercoaster. In early 2020, nationwide lockdowns caused millions of Americans to be temporarily laid off from their jobs.

Then president Donald Trump responded by signing a $2tn aid package aimed at directly helping businesses and individuals, including stimulus checks that put money directly into people’s pockets. This approach was also used in the UK.

It would ultimately be the first of three stimulus packages, together pumping an eye-watering $5tn into the economy.

Shutdown effects.

An initial effect of Worldwide shutdowns was to cut the demand for oil. This caused the price to literally drop below zero. The oil companies had no choice but to cut production - there was nowhere to store the oil! Wells were taken out of production in USA and elsewhere. Demand dropped for other commodities, as did actual production as factories had no workers.

The XL pipeline argument.

This is a total red herring. It has NO bearing on inflation. Several thousand temporary jobs were lost though, but it would only employ about 35 permanent jobs in any case.

Post shutdowns.

That summer, businesses slowly started to reopen. But it would take another year and a half for the unemployment rate to fall back to where it was before the pandemic, and with wages rising due to a tight labor market, consumer spending started to climb: people wanted new homes, restaurant meals, appliances and furniture.

More rapid relaxations. Effect of labor shortages. (workers chose not to return to work or to change jobs?)

US has to pay world prices for oil. There is no shortage of US production.

As the demand for goods soared, supply remained constrained – because of the infamous supply chain crisis, which is only just now starting to ease. At the peak of the crisis, ports were clogged with ships trying to dock, containers were falling into the ocean and there was a shortage of truck drivers. Then, in February Vlad the invader declares war! The world sanctions Russia. Notably oil and gas, sending the world fixed prices into orbit! Ukraine exports are blockaded. Notably grain and fertilizer.

The war in Ukraine, along with China’s own coronavirus lockdown in the spring of this year, also played roles in keeping supply tight during 2022. That means higher prices.

What sectors are driving inflation?

Fuel prices are a big factor, but are now falling.

Gas, food and housing prices have all soared, according to the US Bureau of Labor Statistics. Year-over-year,

gas prices are up 7.5% – though Joe Biden has called the inflation rate “out-of-date”, as gas prices have been falling the last few weeks. He has released oil from reserves to help mitigate.

Some food crops have been badly affected by the hot weather and a shortage of labor.

Prices have also gone up at grocery stores, particularly for fruit, vegetables and non-alcoholic beverages.

Grocery prices over the last year have risen 12.2% – the highest increase since April 1979. Home prices and rent have increased too – up 5.6% compared with last year.

Page created 10th. September. 2022 Newest update 12th September 2022

The effect of Covid 19. This had a number of linked effects.	The Covid-19 pandemic strapped the US economy on to a rollercoaster. In early 2020, nationwide lockdowns caused millions of Americans to be temporarily laid off from their jobs. Then president Donald Trump responded by signing a $2tn aid package aimed at directly helping businesses and individuals, including stimulus checks that put money directly into people’s pockets. This approach was also used in the UK. It would ultimately be the first of three stimulus packages, together pumping an eye-watering $5tn into the economy.
*Shutdow*n effects.	An initial effect of Worldwide shutdowns was to cut the demand for oil. This caused the price to literally drop below zero. The oil companies had no choice but to cut production - there was nowhere to store the oil! Wells were taken out of production in USA and elsewhere. Demand dropped for other commodities, as did actual production as factories had no workers.
The XL pipeline argument.	This is a total red herring. It has NO bearing on inflation. Several thousand temporary jobs were lost though, but it would only employ about 35 permanent jobs in any case.
Post shutdowns.	That summer, businesses slowly started to reopen. But it would take another year and a half for the unemployment rate to fall back to where it was before the pandemic, and with wages rising due to a tight labor market, consumer spending started to climb: people wanted new homes, restaurant meals, appliances and furniture.