(UnitedVoice.com) – For months, both the Biden administration and the Federal Reserve tried to put a positive spin on rising prices. Inflation is hitting virtually everything consumers purchase, including homes, energy, gasoline, food, retail electronics, clothes, and more. Complicating matters is Americans’ challenge when they want to buy things immediately, but items aren’t available. Plush with cash, they are willing to spend despite the inflation spike.
Off the east and west coasts of the United States sit hundreds or thousands of cargo ships waiting to offload precious cargo. After the onsite dock workers unload the cargo ships, there aren’t enough truck drivers to move the supplies around the country. Since the pandemic, millions of people have either retired or discovered new ways to make a living.
Companies can’t keep up with the demand for goods. As long as the demand outstrips the supply, prices will remain high or increase. Even the Federal Reserve is beginning to change its tune and suggests inflation could be with America for several years. It’s already the highest it’s been in over a decade.
Americans Make More Money But Lose It to Inflation
Across the country, businesses are looking for new employees. In jobs once considered low-wage positions, companies are paying handsomely for the help. A retail or fast food job that paid $9 per hour a few years ago now pays $15 per hour or more. Annual wage growth in the 25% lowest-income producing jobs rose 4.8% in August. It’s the highest rate of growth since 2002. While wages are up, so is the cost of what one purchases. Across key purchasing groups such as shelter, transportation, and food, prices are rising faster than wages, creating a net loss for workers despite the wage gains.
The cost of goods and services rose every month in 2021. In August, consumer prices rose 5.3% from 2020, a thirteen-year high. This means real wages for workers fell 0.5% from a year ago during the height of the pandemic. The two years previous, real wage growth was 2.1% annually.
Is Inflation Here to Stay?
The global effects of COVID-19 vaccination mandates resulting in a tightening labor workforce and a lack of transient workers offer no relief from the crippling supply chain issues economists predict over the next several years. The supply-demand imbalance in the global shipping markets may not resolve itself anytime soon. It could be 2023 or longer before the problem is solved.
Federal Reserve economists say price stability is eroding while the underlying issues impacting inflation accelerate quickly. Rampant runaway government spending isn’t helping either. Before the pandemic, the average bank account balance was $1,500. Today, it’s between $6,000 and $7,000, largely due to COVID government-related relief. With money to spend, consumers aren’t holding back. If the supply vs. demand pressures continue, prices will continue to go up.
So, is inflation here to stay? It sure seems that way.
Don Purdum, Independent Political Analyst
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