Unemployment drops as inflation rises
FOX Business correspondent Edward Lawrence looks at the latest jobs report for October on ‘Special Report.'
Inflation is running hot; rising prices are everywhere and are here to stay.
In surveys, economists, producers and consumers are bracing for high costs through the holidays and for the long term. Regular Americans are rightly disturbed by what they are paying at the grocery store and the gas pump.
It’s no consolation that President Biden ignores how his policies are contributing to household economic pain and has no solution. Recently, he said at a town hall event, "I don’t have a near-term answer… I don’t see anything that’s going to happen in the meantime that’s going to significantly reduce gas prices."
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At best, the White House is spinning rapidly rising inflation as a "high class" problem, but regular Americans aren’t buying it. Dollar Tree items are going up 25% and 50% due in part to rising freight, labor, and product costs. Home heating bills are up 21% – and cold weather hasn’t even set in yet. Chief of Staff Ron Klain exposed just how out of touch the elites running Washington are with the day-to-day realities of Americans.
President Biden has a big problem on his hands: inflation is accelerating because of his policies and Americans are starting to connect the dots. As we head toward Thanksgiving and the holiday season, it’s difficult for Americans to get into the holiday mood because they are grappling with inflation on day-to-day essentials. If Congress follows through on his multi-trillion-dollar Build Back Better agenda, only the elites will be able to afford life in America.
Inflation is a hidden tax for all, but it doesn’t affect every household quite the same.
The inflation rate in October came in at 6.2%, which was even higher than expectations. Digging deeper, we find double-digit price increases on household staples like eggs (11.6%), bacon (20.2%), beef (20.1%), and fish (11%). Oil prices are at a seven-year high and gas prices are up 49.6% compared to this time in 2020.
President Biden campaigned as a man of the people. Yet, his policies are fueling their hardships.
Rising food costs were one of the main drivers of inflation last month. Families respond to these price increases differently based on how much food takes out of their budgets. The lowest quartile of households spends twice the proportion of its budget (36%) on food than the middle quartile (15%) but 4 times the proportion of its budget than the top quartile (8%). Elites don’t have to think twice about the price of a ribeye at their favorite swanky steakhouse. However, middle-income families are likely to start making modest changes to their discretionary food spending such as ordering takeout rather than dining in at restaurants or not eating out as often. But for the working poor and elderly Americans on a fixed budget, the choices are far more difficult.
During the pandemic, foot traffic at discount stores increased as price-conscious shoppers looked for places to make their money stretch further. Foot traffic was up 32% at Dollar General and nearly 20% at Dollar Tree stores from pre-pandemic levels. Dollar Tree shoppers are not just popping in for one or two items but tend to be filling up carts, many purchasing more than 10 items during any given trip, and that includes groceries and food staples.
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Demographically, Dollar Tree shoppers like other discount stores skew older, racially diverse, and low-income. Interestingly, they attract a good number of millennials and Gen Z shoppers, who likely can’t afford Whole Foods or even Safeway. These shoppers tend to earn below $60,000 and not to have a college degree.
These are the people that elites in Washington loathe. They are hard-working Americans whose wage increases cannot keep up with rising prices. Many of those hardest hit by inflation also live outside of the D.C. Beltway and beyond other big city limits. According to this analysis, some of the largest cities like Los Angeles, Washington, D.C., Chicago, and New York have had the lowest inflation rates. Meanwhile, inflation in the midwest and southern outpaced the national rate.
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President Biden campaigned as a man of the people. Yet, his policies are fueling their hardships. The San Francisco Federal Reserve found that Biden’s $1.9 trillion American Rescue Package passed early this year will cause inflation to rise by 0.3 percentage points in 2021 and 0.2 percentage points in 2022. Former Obama Treasury Secretary Larry Summers bucked the left and ominously warned that "there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation." He was right.
When the economy was already recovering, widely doling out stimulus checks, unemployment benefits, and expanded child tax credits discouraged workers from taking jobs. Worker shortages make it harder for companies to produce the goods and services that consumers demand. Too much demand and too little supply mean prices will rise. Additionally, employers are raising wages to attract workers and passing increased costs onto the customers.
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Americans understand that massive government spending is fueling inflation. That’s why a plurality of adults oppose Congress passing the $3.5 trillion budget bill according to recent YouGov polling. President Biden and Democrats in Congress do not have a mandate to flood the economy with trillions more in reckless spending nor to expand Washington’s control over our families through cradle-to-grave entitlement expansions.
Biden is pulling out all the stops to get his signature legislation done. The far-left policies in this budget bill will only make life worse for us all, from middle-class families to dollar-store shoppers. Americans cannot afford the future pain that Biden’s "Build Back Worse" plan will inflict.
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Patrice Onwuka is the director of the Center for Economic Opportunity at the Independent Women’s Forum.