Higher Inflation Erodes Americans’ Finances, As Economists Lay Blame On Excessive Dem Spending

Another Terrible Inflation Report Highlights American Families’ Struggles With Soaring Prices, Which ‘Has Left An Indelible Mark On The Economy, Including The Highest Price Increases For Housing, Food And Energy That Many Workers Have Ever Seen’

SENATE REPUBLICAN LEADER MITCH McCONNELL (R-KY): “Moments ago, the country got yet another terrible monthly inflation report under the Biden Administration. Yet again, the data confirm what working families already know painfully well: Rampant inflation and soaring prices are crushing the American people. Experts had predicted another red-hot inflation report, around 7%. Even that alone would have meant we were still trapped inside the worst inflation in 40 years. But reality turned out to be even worse than that. It turns out inflation this past year hasn’t been seven percent. It’s been seven and a half percent. In other words, if you haven’t personally gotten a pay raise of eight percent or more in the last year, then Democrats’ policies have given you a pay cut. To add insult to injury, reporters say the worst of this inflation was driven by the most painful categories for working families: food prices, energy prices, and rent. This is not about financial inconvenience for wealthy people who can afford to stomach it. This is about massive price increases for essential goods that make up a huge share of working families’ budgets. Gasoline is up about 40% since this time last year. Used car prices are up about the same. Meats, fish, and eggs cost over 12% more than they did just one year ago. The cost of natural gas for home heating has soared by 24% since this time last year. Fuel oil has shot up by almost 47%. The cost of essentials has absolutely exploded since Washington Democrats took power.” (Sen. McConnell, Remarks, 2/10/2022)

  • “And to be clear, the worst inflation in 40 years is not something that just spontaneously happened to Democrats on their watch. As a Pew report demonstrated late last year, it’s true countries around the world are facing inflation as a result of COVID, but America has it worse than almost everybody else in the developed world. That is a direct result of liberal policy choices…. The severity of this inflation was directly fueled by the reckless, far-left spending spree that every single Democrat in this chamber voted to ram through at President Biden’s behest last year…. [Democrats] us[ed] the pandemic as a pretext to dump $2 trillion dollars into left-wing policies that were overwhelmingly unrelated to the healthcare fight against the virus. And we see the results all around us. Families are living with the results every day.” (Sen. McConnell, Remarks, 2/10/2022)


Inflation In January Increased 7.5% Year-On-Year, ‘The Fastest Pace In 40 Years’ And The Eighth Straight Month In Which Inflation Exceeded 5%

“A key inflation measure showed that prices are climbing at the fastest pace in 40 years and more quickly than economists had expected. Consumer Price Index data for January, released Thursday, showed that prices have climbed 7.5 percent over the past year, more than the 7.2 percent projected in a Bloomberg survey. On a monthly basis, they picked up 0.6 percent. That is rapid by historical standards, and although it is slower than the fastest monthly increases in 2021, it too was above economists’ expectations. After stripping out food and fuel — the prices of which move around a lot from month to month — inflation climbed 6 percent, the fastest pace since 1982.” (“Prices Climbed 7.5 Percent In January, The Fastest Inflation Since 1982,” The New York Times, 2/10/2022)

“Consumer prices in January surged more than expected over the past 12 months, indicating a worsening outlook for inflation and cementing the likelihood of substantial interest rate hikes this year.” (“Inflation rises 7.5% over the past year, even more than expected and the highest since 1982,” CNBC, 2/10/2022)

January marked the eighth consecutive month in which inflation topped 5 percent. (Bureau of Labor Statistics, Accessed 2/10/2022)

Over The Past Year, Prices For Goods And Services Essential To Everyday Life Have Skyrocketed

The price of all items increased 7.5% year-on-year, the largest increase since 1982. (Bureau of Labor Statistics, Accessed 2/10/2022)

Food prices increased 7.0% year-on-year, the largest increase since 1981. (Bureau of Labor Statistics, Accessed 2/10/2022)

Food at home (grocery) prices increased 7.4% year-on-year, the largest increase since 2008. (Bureau of Labor Statistics, Accessed 2/10/2022)

Prices for food away from home increased 6.4% year-on-year, the largest increase since 1982. (Bureau of Labor Statistics, Accessed 2/10/2022)

Prices for new cars and trucks increased 12.2% year-on-year, the largest increase ever. (Bureau of Labor Statistics, Accessed 2/10/2022)

Prices for housing increased 5.7% year-on-year, the largest increase since 1982. (Bureau of Labor Statistics, Accessed 2/10/2022)

Prices for rent of shelter increased 4.4% year-on-year, the largest increase since 2007. (Bureau of Labor Statistics, Accessed 2/10/2022)

‘As With Previous Months, Higher Prices Oozed Into Just About Every Sector Of The Economy, Leaving Households To Feel The Strain’

“As with previous months, higher prices oozed into just about every sector of the economy, leaving households to feel the strain at the deli counter, shopping mall and just about everywhere else…. [H]igh inflation has left an indelible mark on the economy, including the highest price increases for housing, food and energy that many workers have ever seen.” (“Prices Climbed 7.5% In January Compared With Last Year, Continuing Inflation’s Fastest Pace In 40 Years,” The Washington Post, 2/10/2022)

“Americans are paying about twice as much for gasoline now as they were early in the Covid-19 pandemic. And the high price of fuel is costing consumers away from the gas pump, too, contributing to decades-high inflation on a range of goods and services. When oil becomes more expensive, so does everything else. And $20 doesn’t go as far in a car’s fuel tank.” (“Why High Gasoline Prices Could Stick Around for a While,” The Wall Street Journal, 2/10/2022)


As Inflation Rises, Americans’ Paychecks Are Getting Smaller, With Year-On-Year Real Average Weekly Earnings Decreasing 3.1%

“Real average hourly earnings decreased 1.7 percent, seasonally adjusted, from January 2021 to January 2022. The change in real average hourly earnings combined with a decrease of 1.4 percent in the average workweek resulted in a 3.1-percent decrease in real average weekly earnings over this period.” (Bureau of Labor Statistics, Press Release, Accessed 2/10/2022)


FLASHBACK: President Biden Called November’s Inflation Report ‘The Peak Of The Crisis’

PRESIDENT JOE BIDEN: “It’s the peak of the crisis, and I think you’ll see it change sooner than — quicker than — more rapidly than it will take than most people think. Every other aspect of the economy is racing ahead. It’s doing incredibly well.  We’ve never had this kind of growth in 60 years. But inflation is affecting people’s lives. … I think you’re going to see — you’ve already begun to see, and you’re going to see over the next couple months the oil prices, gas prices — prices of gas pump come down.” (President Biden, “Remarks by President Biden at the Summit for Democracy Closing Session,” 12/10/2021)


The Obama Administration Economist Who Warned Democrats’ Massive Spending Plans Would Trigger Inflation Thinks Americans Might Have Avoided This Pain ‘Without The Overwhelming Stimulus That Was Applied Well Into Recovery — During 2021’

February 2022: LARRY SUMMERS: “I’m not sure that we would have the inflation if there had never been a pandemic and, even if there had been a pandemic, without the overwhelming stimulus that was applied well into recovery — during 2021.” (“Summers Says Pandemic Only Partly To Blame For Record Inflation,” The Harvard Gazette, 2/4/2022)

February 2021: LARRY SUMMERS: “[T]here 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, with consequences for the value of the dollar and financial stability…. [G]iven the commitments the Fed has made, administration officials’ dismissal of even the possibility of inflation, and the difficulties in mobilizing congressional support for tax increases or spending cuts, there is the risk of inflation expectations rising sharply. Stimulus measures of the magnitude contemplated are steps into the unknown.” (Larry Summers, Op-Ed, “The Biden Stimulus Is Admirably Ambitious. But It Brings Some Big Risks, Too.,” The Washington Post, 2/04/2021)

Other Former Obama Administration Economists: ‘The Original Sin Was The $1.9 Trillion American Rescue Plan,’ ‘The United States’ Stimulus Is In A Category Of Its Own’ And Therefore ‘The United States Has Had Much More Inflation Than Almost Any Other Advanced Economy In The World’

JASON FURMAN, Former Obama White House chairman of the Council of Economic Advisers: “It’s definitely too big for the moment. I don’t know any economist that was recommending something the size of what was done.” (“Obama, Biden Economists in Conflict on Inflation Jump, Spending,” Bloomberg News, 5/12/2021)

“‘The United States has had much more inflation than almost any other advanced economy in the world,’ said Jason Furman, an economist at Harvard University and former Obama administration economic adviser, who used comparable methodologies to look across areas and concluded that U.S. price increases have been consistently faster. The difference, he said, comes because ‘the United States’ stimulus is in a category of its own.’” (“Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy,” The New York Times, 1/22/2022)

STEVEN RATTNER, former Obama Administration Counselor to the Secretary of the Treasury: “Enough already about ‘transitory’ inflation…. How could an administration loaded with savvy political and economic hands have gotten this critical issue so wrong? They can’t say they weren’t warned — notably by Larry Summers, a former Treasury secretary and my former boss in the Obama administration, and less notably by many others, including me. We worried that shoveling an unprecedented amount of spending into an economy already on the road to recovery would mean too much money chasing too few goods.” (Steven Rattner, Op-Ed, “I Warned the Democrats About Inflation,” The New York Times, 11/16/2021)

‘A Chorus Of Economists Point To Government Policies As A Big Part Of The Reason U.S. Inflation Is At A 40-Year High’

“At a moment when stubbornly rapid price gains are weighing on consumer confidence and creating a political liability for President Biden, White House officials have repeatedly blamed international forces for high inflation … But a chorus of economists point to government policies as a big part of the reason U.S. inflation is at a 40-year high. While they agree that prices are rising as a result of shutdowns and supply chain woes, they say that America’s decision to flood the economy with stimulus money helped to send consumer spending into overdrive, exacerbating those global trends.” (“Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy,” The New York Times, 1/22/2022)

“Many economists supported protecting workers and businesses early in the pandemic, but some took issue with the size of the $1.9 trillion package last March under the Biden administration. They argued that sending households another round of stimulus, including $1,400 checks, further fueled demand when the economy was already healing. Consumer spending seemed to react: Retail sales, for instance, jumped after the checks went out. Adam Posen, president of the Peterson Institute for International Economics, said the U.S. government spent too much in too short a time in the first half of 2021.” (“Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy,” The New York Times, 1/22/2022)

“[E]conomists are increasingly pointing to the scale and size of the $1.9 trillion American Rescue Plan — which Democrats passed less than two months after Biden came to office — as too big to fill the economy’s hole. This stimulus re-extended more generous unemployment benefits of $400 a week, gave many Americans another round of stimulus checks and expanded the Child Tax Credit, though it has since expired. It also strengthened nutritional assistance and school lunch programs. Many Democrats — except a rare few, such as Lawrence H. Summers, who served under Presidents Bill Clinton and Barack Obama — initially waved off concerns that the spending power of the package could overwhelm the economy and flame inflation. But over time, it became clear that the massive influx in cash that went straight to American households, plus billions more dollars pumped into the broader economy, overheated the recovery…. And as time goes on, an increasing number of economists concede that the American Rescue Plan was too big to fill the hole left by the coronavirus recession.” (“What To Know About Inflation: Rising Prices Hit In U.S., Around The World,” The Washington Post, 2/09/2022)



Related Issues: Inflation, Economy