With Inflation ‘Strangling Kitchen-Table Budgets,’ Democrats Just Voted To Make Things Worse

‘Inflation Is Still Abnormally High’ As ‘Prices Remained Near The Highest Level In 40 Years’

THE NEW YORK TIMES: “[I]t’s easy to overstate how much July’s slowdown matters. Inflation is still abnormally high.” (The New York Times, 8/10/2022)

“The torrid pace of inflation slowed in July for the first time in months, but prices remained near the highest level in 40 years…. Experts cautioned that while the July slowdown is a step in the right direction, inflation is still painfully high and could take some time to return to the Fed’s preferred target of 2%. ’We’re not out of the woods by a long shot,’ said Peter Earle, a research fellow at the non-profit think tank the American Institute for Economic Research. ‘There’s a long way to go, and a lot can happen, before we get back down to that 1.5% to 2.5% annual inflation area that Americans are used to.’” (“Inflation Climbed 8.5% In July As Prices Cool But Remain Near Record High,” Fox Business, 8/10/2022)

July marked the FIFTEENTH consecutive month in which inflation rose at least 5 percent. (Bureau of Labor Statistics, Accessed 8/10/2022)

• July also marked the EIGHTH consecutive month in which inflation rose at least 7 percent. (Bureau of Labor Statistics, Accessed 8/10/2022)

Over The Past Year, Prices For Goods And Services Essential To Everyday Life Have Skyrocketed, With Food And Grocery Prices Increasing The Most Since The 1970s

The price of all items increased 8.5% year-on-year. (Bureau of Labor Statistics, Accessed 8/10/2022)

Food prices increased 10.9% year-on-year, the largest increase since 1979. (Bureau of Labor Statistics, Accessed 8/10/2022)

Grocery (food at home) prices increased 13.1% year-on-year, the largest increase since 1979. (Bureau of Labor Statistics, Accessed 8/10/2022)

Electricity prices increased 15.2% year-on-year, the largest increase since 2006. (Bureau of Labor Statistics, Accessed 8/10/2022)

Prices for housing increased 7.4% year-on-year, the largest increase since 1982. (Bureau of Labor Statistics, Accessed 8/10/2022)

Rental prices for a primary residence increased 6.3% year-on-year, the largest increase since 1986. (Bureau of Labor Statistics, Accessed 8/10/2022)

‘[F]ood Costs Continue To Jump Sharply’

“[F]ood costs continue to jump sharply, increasing by 1.1% over the month and rising 10.9% on a year-over-year basis, the largest increase since May 1979. Food at home spiked by 13.1% on a year-over-year basis.” (CNN Business, 8/10/2022)

• “Grocery prices increased 1.3% in July from a month earlier, the Labor Department said Wednesday. All major grocery categories rose in cost, as prices for coffee surged 3.5%, prices for cereals and baked goods rose 1.8% and costs for dairy products climbed 1.7%.” (“Grocery Prices Continued to Rise in July,” The Wall Street Journal, 8/10/2022)

“Inflation is wreaking havoc on breakfast, with egg prices at grocery stores soaring a whopping 47% in July over last year, according to retail analytics firm Information Resources Inc. Although the Consumer Price Index came in lower than expected at 8.5% in July, inflation is continuing to hit grocery shopping. The food-at-home category soared to 13.1 % over the last year, the largest increase since the period ending March 1979, according to the US Labor Department on Wednesday.” (“Egg Prices in US Jump 47% as Food Inflation Hits Highs Not Seen Since 1979,” Bloomberg News, 8/10/2022)

‘Rent Was Also Up … As Housing Boils Over Into An Economic Crisis For Tenants Nationwide’

“[G]rocery and housing costs continue to strain peoples’ budgets — and will also need to see months of steady declines for overall inflation to get closer to more normal levels. The food index continued to creep up, rising 1.1 percent over the month. Bread was up 2.8 percent over the month, and chicken 1.4 percent. Canned vegetables were up 1.5 percent. Rent was also up 0.7 percent over the month, as housing boils over into an economic crisis for tenants nationwide. All told, shelter index rose 5.7 percent over the last year, accounting for about 40 percent of the total increase in all items, discounting food and energy.” (The Washington Post, 8/10/2022)

‘Inflation Is Strangling Kitchen-Table Budgets Across The United States’

“Inflation is strangling kitchen-table budgets across the United States. Food costs have climbed every month this year. Groceries are 12.2 percent higher now than they were last summer — the biggest year-over-year spike in 43 years, federal data shows. Fruits and vegetables cost 8 percent more, staples such as bread and cereal have jumped 14 percent, and butter and margarine are up a whopping 26 percent.” (“Food Prices Are Still Rising. Here’s How Americans Are Coping.,” The Washington Post, 8/10/2022)

KENTUCKY: “On his day off, [Scott] Carothers is a meal-prepping machine. ‘I’m cooking a large amount of simpler products. But it means I have to eat a lot more of the same thing over and over again,’ he said. He’ll whip up three dishes, such as a seafood gumbo, and make eight or so servings of each, all served on rice, to stretch the portions further. Though Carothers, who manages a bicycle shop, emphasized that he isn’t hurting financially, he still felt the need to cut back. ‘The freezer side has a lot of stuff in it. The fridge side has a lot of nothing in it. Well, condiments,’ he said. He’s also shrinking his Roth IRA contributions, which gives him some pause. ‘I am jeopardizing some of my future.’” (“Food Prices Are Still Rising. Here’s How Americans Are Coping.,” The Washington Post, 8/10/2022)

COLORADO: “[Carolyn] Jemison, a retiree who lives on social security, estimates her grocery bill has increased by 30 percent in the past year. So, she’s had to trim other parts of her budget, ‘because you do need the eggs and milk and laundry soap.’ The gas pump is one place she’s been forced to cut back, she said, as prices in her state pushed as high as $4.92 per gallon this summer. ‘I can’t afford to drive my car to visit [my] kids.’ Another sacrifice: After her cat of 18 years died in 2020, she got a senior rescue cat. Now that cat is gone, and there won’t be another because she can no longer afford the food, litter and veterinary bills. ‘It’s a choice I have to make,’ she said.” (“Food Prices Are Still Rising. Here’s How Americans Are Coping.,” The Washington Post, 8/10/2022)

MARYLAND: “[Megan] Johnson avoids taking her children to the grocery store because ‘little hands reach out and grab a lot more than I want them to.’ Johnson, who works in health-care communications and public relations, said she is now cautious about adding anything extra to the shopping cart. Her money doesn’t go as far anymore, and her income has stayed the same. Her son has special needs and is particular about what he eats. Instant macaroni, one of his favorites, has gone from a four-pack for $4 to $5.50, for instance. ‘It’s not a huge thing, but I go through a lot of those things. He won’t settle for anything other than this very specific food.’” (“Food Prices Are Still Rising. Here’s How Americans Are Coping.,” The Washington Post, 8/10/2022)

NEW YORK: “For years, Margaret Rodgers, a retiree who lives in Astoria, Queens, has shopped for fruits and vegetables at the Union Square farmers’ market in Manhattan. She keeps track of her food budget by filling a pouch with $80 in cash. But lately, the pouch has emptied after just two trips to the market. She was shocked to discover that a pint of berries was now at least $8. ‘For the first time in my life, I am really feeling the effects of the increasing cost of food,’ said Ms. Rodgers, 79. Ken Migliorelli, who sells produce at the market from his family farm in Dutchess County, said he has had to raise prices across the board. As the war in Ukraine constrained the supply of oil, high gas prices made it more expensive for Mr. Migliorelli’s trucks to drive produce 100 miles from the Hudson Valley to the city. The price of fertilizer has soared, exacerbated by the supply-chain and export disruptions of the war. This year, Mr. Migliorelli raised the price of blueberries by $2 to $3; they’re now $8 a pint. A pound of peaches rose to $5, from $3.50 last year. Zaid Kurdieh of Norwich Meadow Farms, another vendor at the Union Square market, said he is trying to minimize price increases on staples like zucchini and carrots, but plans to raise prices by as much as 30 percent on items that are in demand at high-end restaurants, like baby squash. A pound of cherry tomatoes at his stand is now $12, up from $10 last year. ‘I can’t keep up with expenses at the moment,’ Mr. Kurdieh said. ‘I’m not seeing the light at the end of the tunnel.’” (“$15 French Fries and $18 Sandwiches: Inflation Hits New York,” The New York Times, 8/08/2022)

And The Wage-Price Spiral Shows Little Signs Of Easing, As Wages Rise Through A Labor Shortage, Driving Prices Ever Higher, And Making It Still Harder For Workers To Keep Up

‘Wage Gains Haven’t Kept Pace With Inflation’: Americans Continue More Of Their Paychecks To Inflation, With Year-On-Year Real Average Weekly Earnings Decreasing 3.6%

“Real average hourly earnings decreased 3.0 percent, seasonally adjusted, from July 2021 to July 2022. The change in real average hourly earnings combined with a decrease of 0.6 percent in the average workweek resulted in a 3.6-percent decrease in real average weekly earnings over this period.” (Bureau of Labor Statistics, Press Release, Accessed 8/10/2022)

“Wage gains haven’t kept pace with inflation. Private-sector wages and salaries declined 3.1% in the second quarter from a year earlier, when accounting for inflation.” (“Rapid Wage Growth Keeps Pressure on U.S. Inflation,” The Wall Street Journal, 8/09/2022)

“Households expect much higher inflation in a year than they did in spring of 2021, which could lead workers to demand higher wages to keep up with the cost of living. That might push up broader inflation, at least in the short run, according to a new Federal Reserve Bank of San Francisco analysis.” (“Rapid Wage Growth Keeps Pressure on U.S. Inflation,” The Wall Street Journal, 8/09/2022)

As Labor Costs And Other Business Expenses Rise, Prices Go Up Too

“[M]any companies are having to pay more for labor at the same time that other business expenses are rising, including for transportation and logistics, said Omair Sharif, head of forecasting firm Inflation Insights LLC…. Mr. Sharif pointed to airlines as an example of the wage-price dynamic. Some airlines have negotiated double-digit wage increases for pilots, as carriers struggled to hire enough of them to meet fast-rising demand for flights. Meanwhile, jet-fuel costs have shot up. Those factors have likely converged to drive up the price of plane tickets, Mr. Sharif said. In June, airfares were up 34.1% from a year earlier.” (“Rapid Wage Growth Keeps Pressure on U.S. Inflation,” The Wall Street Journal, 8/09/2022)

“A wages and benefits report released in late July that is widely watched inside the Fed also defied the idea that wage growth was slowing. Wages and salaries for private-sector workers grew 5.7% in the second quarter from a year earlier, the fastest pace for records tracing back to 2001, the report said.” (“Rapid Wage Growth Keeps Pressure on U.S. Inflation,” The Wall Street Journal, 8/09/2022)

The Tight Labor Market Is Also Pushing Wages Higher, ‘A Factor Contributing To Four-Decade High U.S. Inflation’

“Workers’ wages are rising briskly, a factor contributing to four-decade high U.S. inflation. Average hourly earnings grew 5.2% in July from a year earlier, and annual wage gains have exceeded 5% each month this year, the Labor Department said Friday. The rapid earnings growth adds to other evidence that employers are continuing to increase pay as they try to find and keep workers in a tight job market.” (“Rapid Wage Growth Keeps Pressure on U.S. Inflation,” The Wall Street Journal, 8/09/2022)

• “Job openings well exceed the number of unemployed Americans seeking work. There are fewer people seeking a job than before the pandemic, with scant evidence that the situation will quickly improve. In fact, the share of adults working or looking for a job decreased in July from a month earlier.” (“Rapid Wage Growth Keeps Pressure on U.S. Inflation,” The Wall Street Journal, 8/09/2022)

In Light Of This Report, How Can Joe Manchin Explain His Vote For Democrats’ Reckless Taxing And Spending Spree To West Virginians?

Sen. Joe Manchin (D-WV) provided the deciding 50^th vote on Sunday for Democrats’ reckless taxing and spending spree. (H.R. 5376, Roll Call Vote #325: Passed 51-50: D 48-0; R 0-50; I 2-0, with Vice President Harris voting Yea, 8/07/2022; Manchin voted Yea)

Inflation In July 2022 Was Worse Than It Was In December 2021 When Manchin Claimed He Couldn’t Vote For Yet More Taxing And Spending

SEN. JOE MANCHIN (D-WV): “I still have these concerns and where I’m at right now, the inflation that I was concerned about, it’s not transitory, it’s real, it’s harming every West Virginian. It’s making it almost difficult for them to continue, to go to their jobs, the cost of gasoline, the cost of groceries, the cost of utility bills -- all of these things are hitting in every aspect of their life…. So when you have these things coming at you the way they are right now, I’ve always said this, Bret, if I can’t go home and explain it to the people of West Virginia, I can’t vote for it.” (Fox’s “Fox News Sunday,” 12/19/2021)

According to the EIA, the weekly national retail gasoline price on December 20, 2021 was $3.295 per gallon, and on August 8, 2022, the weekly national retail gasoline price was 4.038 per gallon. (U.S. Energy Information Administration, 8/10/2022)

In December 2021, grocery (food at home) prices increased 6.5% year-on-year, and in July 2022 they increased 10.9% year-on-year, the largest increase since 1979. (Bureau of Labor Statistics, 1/12/2022; Bureau of Labor Statistics, Accessed 8/10/2022)

In December 2021, electricity prices increased 6.3% year-on-year, and in July 2022 they increased 15.2% year-on-year, the largest increase since 2006. (Bureau of Labor Statistics, 1/12/2022; Bureau of Labor Statistics, Accessed 8/10/2022)

In December 2021, natural gas prices increased 24.1% year-on-year, and in July 2022 they increased 30.5% year-on-year. (Bureau of Labor Statistics, 1/12/2022; Bureau of Labor Statistics, Accessed 8/10/2022)

In December 2021, rental prices for a primary residence increased 3.3% year-on-year, and in July 2022 they increased 6.3% year-on-year, the largest increase since 1986. (Bureau of Labor Statistics, 1/12/2022; Bureau of Labor Statistics, Accessed 8/10/2022)

Last Month, Manchin Claimed He Wanted To Wait To See The July Inflation Numbers That Were Released Today Before Democrats Went Ahead With Their Partisan Legislation

SEN. JOE MANCHIN (D-WV): “I said, Chuck until we see the July inflation figures. Until we see the July, basically, Federal Reserve rates, interest rates, then let’s wait until that comes out so we know that we’re going down the path that won’t be inflammatory to add more to inflation. Inflation is absolutely killing many, many people. They can’t buy gasoline, they have a hard time buying groceries, everything they buy and consume for their daily lives is a hardship to ‘em. And can’t we wait to make sure that we do nothing to add to that? And I can’t make that decision on basically on taxes of any type and also on the energy and climate because it takes the taxes to pay for the investment in the clean technology that I’m in favor of. But I’m not going to do something and overreach that causes more problems.” (MetroNews’ “Talkline with Hoppy Kercheval,” 7/15/2022)

• MANCHIN: “So I’m asking every expert that has the knowledge for that, and I said Chuck, can we just wait until the inflation figures come out in July? Until basically the Fed rate, the Reserve, are they going to raise interest? How much more and how much damaging is that going to be? And then make a decision what we can do and how much we can do.” (MetroNews’ “Talkline with Hoppy Kercheval,” 7/15/2022)

• MANCHIN: “But with that, I want to make sure that we’re not harming our economy with some of those people that they’re going say well to change this tax code and put that minimum even though that we have earned the discounts because of our investments, the money we’re putting back, we’re hiring, we’re building. I want to make sure that we haven’t disrupted that. That’s all. We’re looking at everything Hoppy. I’m not throwing caution to the wind. I want to make sure and this July figures will tell us if we’re on track to do what we need to do or we have to adjust it, that’s all.” (MetroNews’ “Talkline with Hoppy Kercheval,” 7/15/2022)

MANCHIN: “[I]nflation is my greatest concern because of how it has affected my state and all over this country, and that’s all I have to say.” (Politico, 7/18/2022)

REMINDER: The Penn Wharton Budget Model And Tax Foundation Estimated Democrats’ Reckless Taxing And Spending Bill Would Increase Inflation While Inflation Is Currently High And ‘Likely Won’t Reduce Inflation At All’

PENN WHARTON BUDGET MODEL: “We estimate that the Inflation Reduction Act will produce a very small increase in inflation for the first few years, up to 0.05 percent points in 2024. We estimate a 0.25 percentage point fall in the PCE price index by the late 2020s. These point estimates, however, are not statistically different than zero, thereby indicating a very low level of confidence that the legislation will have any impact on inflation.” (“Inflation Reduction Act: Preliminary Estimates Of Budgetary And Macroeconomic Effects,” Penn Wharton Budget Model, 7/29/2022)

• “The Inflation Reduction Act of 2022, the breakthrough US legislative deal on key parts of President Joe Biden’s agenda, likely won’t reduce inflation at all, according to a study. And that’s coming from researchers influential with the senator whose vote was crucial to sealing the deal, Joe Manchin of West Virginia. The study, from the Penn Wharton Budget Model, estimates the act would cause inflation to ‘very slightly’ rise until 2024 then slide after that. Overall, the researchers said in the report Friday, there’s ‘low confidence that the legislation will have any impact on inflation.’” (“‘Inflation Reduction Act’ Has Little Inflation Help, UPenn Study Says,” Bloomberg News, 7/29/2022)

TAX FOUNDATION: “By reducing long-run economic growth, the bill worsens inflation by constraining the productive capacity of the economy. … By increasing spending, the bill worsens inflation, especially in the first two years, as revenue raisers take time to ramp up and the deficit increases. We find that budget deficits would increase from 2023 to 2025, potentially worsening inflation. To the extent the tax credits and health-care subsidies are expected to be extended on a permanent basis, these policies put upward pressure on inflation. Lastly, to the extent the durability of the bill’s provisions are in doubt—that is, due to the lack of bipartisan support—it may have little impact on expectations about the fiscal outlook and therefore inflation. On balance, the long-run impact on inflation is particularly uncertain but likely close to zero.” (“Details & Analysis of the Senate Inflation Reduction Act Tax Provisions,” Tax Foundation, 8/02/2022)