Among the things the recent recovery may lack - jobs, for one - there is one thing we have in abundance: Inflation worries. And why not? Food prices are rising. Gas prices are rising. And many think the Federal Reserve's efforts to boost the economy could lead to massive inflation. About six months ago, Sarah Palin and Glenn Beck began whipping the Tea Party and their other many followers into an inflation fear frenzy. And, of course, there was the famous Ben Bernanke bear video.
Now Americans in general seem to be catching inflation fever. Last week, the Conference Board reported that when it asked Americans last month what they think inflation will be a year from now, the average response was 6.7%. That would be a huge jump from where inflation is now. In the past year, prices are up just 2.2%. If inflation were to jump to 6.7% that would be a 205% increase in the rate of inflation in one year.
How likely is that? Not very. Here's why:
First of all, the last time inflation in this country topped 6.7% was nearly 30 years ago in July of 1982. The last time we were close to that rate of price increase was in the middle of 2008, when inflation reached 5.5%. But that was at a time when the economy was booming, which is usually when you get inflation. And with an unemployment rate of 8.8%, it's hard to argue that the economy is in a boom.
Even more importantly, huge jumps in inflation tend not to happen that often. And a jump of over 200% in one year in inflation hasn't happened in at least 50 years, perhaps longer. ( I only looked back to 1960.) Even during the 1970s inflation didn't jump more than 200% in one year. The biggest jump back then was in December 1973 when inflation jumped 161% to 8.9% from 3.4% the year before. In August 2008, inflation jumped 179% from the year before to 5.3%, but again the economy was at the end of a long boom. The one exception was a jump last year of year-over-year inflation to 2.2% from 0.1% the year before. That was a huge rise, 2100%. But that was off such a low rate it doesn't really count. And inflation that low, which is to say basically not existent, can be bad for the economy as well.
Of course, that's not to say a 200% jump in inflation couldn't happen this year. Indeed, members of the Federal Reserve's policy committee, which released the minutes of its March meeting on Tuesday, seem a little more worried than it did about inflation just a few months ago. The US central bank's policy committee members worried that rising gas and food prices could trigger a general price surge. Though they said, for now, underlying measures of inflation remained low.
And in a piece on Tuesday, the Washington Post claims that inflation is already quite high. The article says that if you look at just the past three months, inflation is already rising at an annualized rate of 5.7%, pretty close to that 6.7% prediction. Annualized meaning if you take the rate it has moved up in the past month alone (I think here they may have been looking at a three-month average-a short time period nonetheless) then assume inflation will continuing rising at that rate for a whole year you get the projected annualized rate. But the problem with that analysis is that monthly rates rarely hold for a whole year. In June 2009, for instance, inflation jumped 0.7% that month. Annualize that rate and you would think that inflation was on a path to be up 8.4% in the next year. In fact, inflation only rose a 1.1% over the next 12 months.
Hot Air, a blog that is a favorite of Tea Party types, cheered the Wash Po article saying it was about time others were recognizing the coming inflation danger. Unlike the Washington Post, though, Hot Air landed on the fact that inflation was being driven by rising energy prices. And that does seem to be true. But if you believe that, then you also have to believe that the recent jump in inflation is probably coming to an end or at least leveling off. Gas prices have for the time being stopped rising. And the slow down in Japan will probably hold gas prices in check for the next few months.
Lastly, typically the biggest driver of inflation is wages. And in the most recent jobs report, wages weren't rising. Wages were flat from the month before. And as long as we have 14 million Americans out of work, it's hard to see a big jump up in wages.
So where does that leave us? Yes inflation may increase, and likely will. It always does in recoveries. But will inflation jump as high as many Americans think? Probably not. If you've got inflation fever, it's probably time to stay indoors for a little bit, have some chicken soup and start to feel better.
These people are mentally disturbed beyond reparation. I've never seen a group of Americans blame everything and anything on everyone they can point at except the one person 4 fingers are always pointing back to. THEMSELVES.
Instead they somehow assign blame to two people they spend most of their waking hours trying to discredit, smear, outright libel whenever they can by asserting they're insignificant wonks regarding any subject they broach, they being Glenn Beck and Sarah Palin.
It's so funny to hear from a Media source along with it's leftist subscribers complain about inflation of all things when it was they for 4 years into the Bush administration began talking down the economy to do exactly what they blame Palin and Beck for in this POS to bring about a self fulfilling prophetic recession. A card they so overplayed it ultimately led to the complete and utterly tsunami-like banking meltdown
A meltdown every economist in the world not on the leftists agenda's payroll concurs was caused by lax Dem fiscal oversight of Fannie and Freddie that was outright dismissed by the entirety of the democratic side of the aisle, despite numerous warnings and attempts by the Bush administration to reign in.
Not to mention the democratic forcing of American financial institutions to lend money to outright dangerous and absurd loan candidates without any real effort to ascertain their ability neither short nor long term ability to pay back such loans should any financial waves come into play.
Literally trillions of dollars dumped into Minority communities to people who had never gotten a loan in their lives much less hundreds of thousands of dollars in mortgages that most had neither the ability nor intention to really make an effort to pay off if hard times came America's way.
And sure as shiiite, those hard times that dems talked up to bring about a recession to remove Bush from office if possible or at least as a weapon to yield against John McCain, which they also did successfully due to their sheepish followers' rabid mad dog Bush hatred.
A demented apoplectic hatred that pushed them all to vote for someone named Hussein of all middle or surnames not less than a decade after 911 without nary again a speck of business or economic experience in his unverifiable curriculum vitae which for the most part was an Affirmative Action piece of Fiction.
Not even a hot dog stand or lemonade stand's experience worth which most children acquire sometime in their childhood!!!!
There were loud warnings of which they not only ignored but openly scoffed at that anyone can see for themselves by Googling 'dem caused financial tsunami in congress" and watching the leftists like Maxine Watters and Barney Frank literally laugh at out loud, numerous times.
All of which is now very predictable causing Inflation which will undoubtedly reach hyper destructive proportions before ever beginning to alleviate, which has been caused by one person and one person only for all intents and purposes. A person who ridiculously seems to think American money grows from printing presses, and should be handed out by the billions to anyone who cheerlead's their suicidal socialist Marxist agenda.
A man who has never in his life logged a single minute of business management or operational experience, yet somehow was miraculously elected president in spite of this third grade level of Business and finance understanding in the midst of a complete financial free fall by 100 million welfare cases for the most part.
A man who's childlike free for all spending on feel good nanny state handouts, who's Fed has been printing more money than Parker Brother's has for their Monopoly games over the past 50 years that a Banana boat captain or a Kenyanese economist can see as plain as day is the single solitary cause of the nation's financial ills, both it's present emergency state and undoubted pending collapse.
It's so sickening to see either the rampant ineptitude or flat out nation destroying partisanship which has reached epic Soviet propaganda levels as their obviously beyond ignorant herds of sheep have no idea whatsoever to even think anymore, unless it's either spoon fed or anally injected into their severely abnormal brains.
You say Chicagoray" Not to mention the democratic forcing of American financial institutions to lend money to outright dangerous and absurd loan candidates without any real effort to ascertain their ability neither short nor long term ability to pay back such loans
I did not know this, had I know Banks were forced to lend money I would have put in for a 1.5 million line of credit and not feel embarrassed I'd be working on my second million now and you know they say the first is always the hardest to make and I believe that. What is Beck saying the next oportunity is? I better start watching him I feel so dumb.
I did not know this, had I know Banks were forced to lend money I would have put in for a 1.5 million line of credit and not feel embarrassed I'd be working on my second million now and you know they say the first is always the hardest to make and I believe that. --------------------------------------------------------- I know you're trying to be facetious but I worked at one of these major banks right after college in this past decade and chicagoray, sadly to say, is not far off. We did loans in the high 6 figures to people who should not have gotten these.
Now I am not one these Palin-Beck nutjobs, I think they are idiots. But back when we weren't trying to be partisan with the blame when I worked for this bank, all the execs explained to me that we were doing the govt's mission of spreading homeownership. And I'd say half the execs were Reps and the other half Dems.
I'm not blaming the gov't, this IS MOSTLY Wall St's fault. But Wall St had to get the idea from somewhere.
It's like if the gov't said eating bacon double cheeseburgers was good for you so sales at McDonalds and Burger King jumped. Then people started having heart attacks left and right. Whose fault is it? Burger Kings? Or the gov't for perputuating a lie and being Burger Kings' free marketing wing?
Homeownership as being something good for everyone is a lie. The gov't should never have pushed it.
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