Inflation Is A Problem, But Not Caused By White House

Anytime there are economic pains felt across the nation the attempt to pin the blame on the occupant of the White House is the first action taken by the party out of power. Politically, I totally understand that phenomenon. Except in a few cases, however, that is not a logical way to view the factors that move the economy.

One instance of cause and effect between a president being reckless and the economic downturn which followed was in the 19th century. In 1832, Andrew Jackson ordered the withdrawal of federal government funds from the Bank of the United States, an institution he railed about and carped on endlessly. His actions are noted for what resulted during the Panic of 1837.

The consequences of the international implosion of so many aspects of numerous economies due to the pandemic were always going to be followed by some degree of inflation. Just based on the struggle to align all the parts of the supply and demand sectors would doubtless prove problematic. Regardless of who ruled in China, Germany, or Washington.

In the newspaper today a few solid paragraphs written by Josh Boak of Associated Press put some logic to the larger issue of inflation angst.

Consumers account for most U.S. economic activity, meaning they steer much of what happens with their collective choices. Their role tends to get overlooked in political speeches, which generally reduce the economy to talk about jobs, factories and other forms of production. Biden has gone so far as to say that his policies to promote port upgrades and domestic manufacturing will lower costs by improving production, a long-term fix to an immediate problem that can be reduced, simply, to demand exceeding supply.

“Fundamentally, the problem right now is the opposite of stagflation — it’s regular inflation driven by an economy operating at or even above its potential, with consumer demand outstripping the capacity of the economy,” Stevenson said. “I’m hoping that people stop digging into their savings and cut spending a little — not enough to slow the economy, but enough to slow the price increases.”

Stevenson also acknowledged that gas prices in particular might be driving the broader dissatisfaction, such that overall inflation could fall and do little to calm public anxieties so long as prices at the pump are high.

“Cars seem to be important to people’s sense of control and high gas prices for some might feel like losing your ability to just hop in your car and go where you want,” she said.

Despite the spike in prices, consumer spending increased faster than inflation during the first four months of this year. Whether consumers can maintain such robust spending will largely determine how the economy fares in the coming months.

I do not expect anything other than the continued political heat about inflation right through the midterm elections. Yes, if the GOP were in power the Democratic pols would be singing the tune the GOP now is using in races nationwide. None of that is shocking.

But it does underscore what I preach with frequency. Along with civics and history, our nation needs more time spent on economics education, too.

How Much Does Your Big Mac Cost? Higher In Northwest Arkansas Than Manhattan

I find an odd interest in certain economic stories. This post makes that point most clear.

Today Axios offered this nugget–no pun intended–about McDonald’s iconic signature sandwich. It is not a leap of logic to know that where wages are higher, the cost of a Big Mac generally goes up. Still, the numbers are of interest. Perhaps for you, too.

Data: Economic Policy Institute, Axios research; Chart: Simran Parwani/Axios

So…..Northwest Arkansas Big Macs cost more than in New York.

In Austin, Texas, where the minimum wage is $7.25 an hour, a Big Mac is $3.75.

A Big Mac in San Francisco, where the minimum wage is $16.32 an hour, is $5.79.

In New York City, where the minimum wage is $15 an hour, a Big Mac can be found on Broadway for $4.95.

But, but, but: In NWA, (Northwest Arkansas) where the minimum wage is $11 an hour, the price of the signature sandwich (no sides) is $5.19. That’s nearly a quarter of a dollar more than in Manhattan.

WIN: Whip Inflation Now

Here is another reason to pay heed to how books are aligned in your home library. Moving them about will perhaps give you an idea for a blog post. (I simply could not allow this space to be taken over today by the slap heard around the globe. Not giving an inch of this blog to drama queens and angry man-boys.)

Putting my White House Press Secretary books in a new order meant I had to move Ron Nesson’s book, It Sure Looks Different From The Inside, and of course, thumbing through it again was warranted. President Gerald Ford, like President Joe Biden today, was dealing with high inflation across the nation.

Ford had a plan to deal with inflation. Whip it.

On page 75 Nesson writes that Ford was earnest bout the WIN program, based on the home-spun notion that the average citizen, in little ways, could help whip inflation.

As I searched for a few photos about WIN on the internet I came across attempts to enlist people at planting a local garden to stave off high food prices. Given the small size of the seed packets, it seemed like terrace gardens were in mind. Back home in Hancock during this time period, like the years before and after, we had a massive garden with at least 40 potato plants each summer, rows of corn, tomato plants galore, and everything else that could grow in soil.

The reason to write this post, other than a trip down memory lane, is to alert us to the road we have traveled many times before, and the fact we made it through. We always do. High gas prices are not a new feature of life, nor the grousing about them.

The pandemic was most unsettling and for far too many deadly. The undermining of our economy from COVID remains staggering. But if we are smart we can traverse around new variants rather than needing to bluntly marshall the populace through them. Vaccines are still the best route to a robust economy.

Thankfully, in the United States, Africa, China, South America, and most of Europe, it can be said that we can be counted as among the fortunate ones. We can all say our homes are not being shelled by Russian invaders.

All of a sudden inflation is not so pressing.

And so it goes.

Inflation Not Issue With Democrats’ Job And Revenue Generating Proposals

The news has lately been filled with stories about price increases from gasoline to beef. But just as many stories have been reported that airlines are selling tickets galore and sales are percolating at stores. This morning the lead story above the fold in The Wall Street Journal was titled Shoppers Increase Spending, Despite Inflation.

U.S. consumers withstood rising inflation to power a burst of shopping ahead of the holiday season, with big retailers reporting higher sales and expectations for a solid finish to the year.

Sales at U.S. retail stores, online sellers, and restaurants rose in October by a seasonally adjusted 1.7% from the previous month, the Commerce Department said.

While it is possible to track the reasons for inflation since the pandemic, the supply chain disruptions, and the unemployment numbers or as it has also been termed the “mass resignations’, it must be noted why we must not throw away the chance to advance our society with policies that have been long sought. We need to understand that these proposed initiatives are not inflation-inducing.

When it comes to the Build Back Better legislation some partisans who desire to undermine President Biden rather than listen to the strong support from the public, as polls show, have used the fear of inflation as their rhetorical tool. But the facts and logic are not on their side.

This week at the signing of the massive and much-needed infrastructure bill Republican Senator Rob Portman spoke words that did not make as much news coverage as they warranted. His message was clear. Investing in jobs and revenue-generating ideas is a path towards a strong US economy.

“It represents a long-term investment in our nation’s hard infrastructure assets that will create hundreds of thousands of jobs, and make us more efficient, more productive and more competitive against other countries like China. Importantly, economists agree that by investing over time in hard assets, it adds to the supply side of the economy, and will be counter-inflationary at a time of rising inflation. And it does all of this without raising taxes on the American economy as we are coming out of the pandemic. In contrast, the partisan tax and spend Build Back Better plan will increase inflation through massive stimulus spending and hurt the economy through massive tax increases.

While it is easy to locate the latest screed from the likes of GOP Senators Ted Cruz or Ron Johnson it obviously makes far more sense to listen to the words of economists and learned individuals. Such as Mark Zandi who for years has been read and heard in this nation about economic matters. He is now the chief economist of Moody’s Analytics.

The hair-on-fire discourse over high inflation is understandable, but it’s overdone. … My inflation outlook could be Pollyannish, but only if inflation expectations — what investors, businesses, consumers and economists think inflation will be in the future — rise. If there is a widespread view that inflation will remain high, workers will demand higher wages to compensate and businesses will ante up, believing they can pass along their higher costs to their customers. This vicious wage-price spiral was behind the persistently high inflation we suffered 30 years ago. But there is no evidence that this is happening today.

All of this refutes the notion that the government spending and tax breaks to support the economy through the pandemic, including the American Rescue Plan this past March, are somehow behind the higher inflation. These factors certainly gave a boost to demand last spring, but that faded when the Delta variant gained momentum this fall. There is also no good way to connect the dots between the Build Back Better agenda, which is currently being debated in Congress, and higher inflation. The legislation provides support for public infrastructure and various social programs, and longer term, it is designed to lift the economy’s growth potential, which will ease inflationary pressures.

The fact is that inflation fears are being used by Republicans to confuse a certain segment of the nation and undermine the sitting president. They are not interested in, or understanding of the popular support for housing programs, climate-change policies, and a plethora of other matters contained in the Build Back Better legislation.

Fear may get them a headline now, but the nation is deserving of progress that history will long record.

And so it goes.

F-35s To Be Housed At Truax Field, Sun To Rise Tomorrow

The news today was good, even if not everyone as of yet understands why.

Members of the 115th Fighter Wing said goodbye to the first F-16 ever stationed at Truax Field as the Wisconsin National Guard continues preparing for the next generation of fighters to arrive.

In a post on Facebook, the Guard shared images of the jet, numbered 252, explaining that it first touched down in Madison in April 1993. At that time, Truax Field housed the A-10 Thunderbolt II and was starting its upgrade to the F-16s.

Nearly three decades later, the Guard is upgrading again, this time from fourth-generation aircraft to the fifth-gen F-35 Lighting II. Deputy Adjutant General Gen. David May described the upgrade as “moving from a flip phone to a smartphone” during an August groundbreaking ceremony for the base’s first major F-35 project.

It comes not as news to readers of this blog that I feel a shared responsibility as to the reason for my support of these jets. I expressed it in 2019.

We must take our responsibilities as citizens most seriously.   From voting, serving on a jury, or paying taxes it is our duty to step up and serve in a variety of ways.  That also applies to where the military trains, such as at Truax.  I do not know any person on a first name basis who is actively serving in our military.  So the least I can do is support the men and women who have accepted that role.  If I am advocating policies, such as no-fly zones in Syria, I then should also accept the placement of training for such missions near to where I reside. I am not one who suggests the F-35 be relegated to places like North or South Dakota.

This matter of the F-35 jets is not about noise, as many will try to argue.  A segment of the city and even in Dane County will try to spin their narrative about how their grandchildren will be scared–yes I have heard and read such arguments– but I suspect not since most play very violent video games where a jet taking off is the least dramatic event. To hear some of the dialogue about why people are opposed to the F-35s would lead one to conclude that deafening roars will shake windows from frames, and do everything but rattle the ground so much that caskets will pop out. 

Let us be honest and say at the heart of the matter is a deep disdain about the manufacture and use of the jets.   Madison is very averse to military policy and what has played out over the past couple years regarding these jets has alerted us, again, to that truth.

Here is the bottom line as to why we all need to care about that ginned-up rhetoric.

It is true that some of Madison loves to get caught up in their own self-generated hysteria.  This is what happens all too often and it takes a toll as when truly serious matters arise people are spent and not wishing to expend more energy.  The other half is so dismayed from the crying of ‘wolf’ they tune other messages out.

For the record I often hear the F-16s take off and land from Truax.  I assumed when moving into an urban environment, with an airport and military facility only a few miles away, that there would be sounds from aircraft.  The fact is that the military presence at Truax has proven to be a good neighbor for over 70 years.  Currently the 115 Fighter Wing flies F-16 jets, but those are to be replaced with 20 F-35 jets.

The first one will soon call Truax home.

And so it goes.

Shortages On Madison Store Shelves, Worldwide Economic Concerns

Perhaps it is a coping mechanism, but during the pandemic, I latched onto certain topics and followed them rather closely. (Anything that was not about people on ventilators!) Then again, I might just be a nerd and that explains why I follow up on certain topics. But really, how can anyone not find some desire to better understand the effects of swamping the shipping industry with cargo, as happened in 2020?

Regardless of the reason, I have found interest in the costs of homes, reading today that the median price of one in Californian is $800,000. The stock of available homes for sale, the construction of new ones, along with the housing bubble is a topic I enjoy hearing about from our realtor friends.

I also find my curiosity heightened by the worldwide problems with supply chains concerning a wide swath of products. When masks, disinfectant wipes, and meat products had shortages and distribution problems during the pandemic there was a desire to better understand why. In the middle of 2021, as the shortages continue, and the world is impacted, as with the lack of computer chips for new auto construction, there are many others now trying to understand the reasons, too.

WISC reported on this issue Tuesday.

Tim Metcalfe, owner of Metcalfe’s Market, has seen it too. Paper towels, toilet paper, cleaning supplies, and bottles of water are once again in short supply at his Madison-based stores.

“We might not have Dasani,” Metcalfe said. “But we do have ‘Everyday Essential.’ There’s always product available. It might just be a different brand.”

Part of the problem is increased demand: Grocery sales are up about 14% nationally from this time two years ago. But it’s also the result of a supply chain issue.

With the supply shortages, comes naturally an uptick in prices.

Kurt Bauer, president of business lobbying group Wisconsin Manufacturers and Commerce said that the supply chain is also causing issues because production hasn’t rebounded from the downturn caused by COVID-19.

“It takes a while for production to fill that demand, and so there’s more demand than there’s supply,” said Bauer.

Bauer said those issues are feeding into inflationary pressures, which are trickling down to consumers.

“Right now, what we’re seeing is something akin to an accident on a busy highway,” said Bauer. “There’s a bottleneck, and it takes time for traffic to resume normal flow after the accident is cleared.”

Bauer said as shortages ease, some prices could be driven down, but he said inflationary pressures “are here to stay, at least for the time being.”

The New York Times approached this topic from a worldwide perspective this week.

In the face of an enduring shortage of computer chips, Toyota announced this month that it would slash its global production of cars by 40 percent. Factories around the world are limiting operations — despite powerful demand for their wares — because they cannot buy metal parts, plastics and raw materials. Construction companies are paying more for paint, lumber and hardware, while waiting weeks and sometimes months to receive what they need.

In Britain, the National Health Service recently advised that it must delay some blood tests because of a shortage of needed gear. A recent survey by the Confederation of British Industry found the worst shortages of parts in the history of the index, which started in 1977.

The Great Supply Chain Disruption is a central element of the extraordinary uncertainty that continues to frame economic prospects worldwide. If the shortages persist well into next year, that could advance rising prices on a range of commodities. As central banks from the United States to Australia debate the appropriate level of concern about inflation, they must consider a question none can answer with full confidence: Are the shortages and delays merely temporary mishaps accompanying the resumption of business, or something more insidious that could last well into next year?

The economic levers and interworking parts of a global supply network may seem dry and academic. Until the item we wish to buy at the local store or purchase overnight through Amazon is just not available.

And so it goes.

Anti-Vaxxers Causing Economic Woes, 4th Wave Of Pandemic Strikes Nation

The alarm bells are ringing again about the economy due to another wave of COVID-19. It goes without saying that economic downturns will result from any pandemic wave. But it also needs to be stated this 4th wave was totally and absolutely preventable as the cause of it is totally related to those who refuse to follow science and get the vaccines shots.

Mind-boggling, though it is, we hear from Republicans and conservatives that they care about economic growth. They tout tax cuts as growth measures, and cuts in regulations to stir business creation. But when it comes to the easiest and obvious measure to stop a pandemic and ensure a robust economy and stabilized markets those same people in places all over the nation refuse to get the vaccine.

The negative impact of their decisions is now showing up in business reporting.

“When companies began announcing tentative return-to-office plans this spring, there was a sense of optimism behind the messages. Covid cases were dwindling in the United States as the vaccine rollout picked up pace. Employers largely hoped their workers would get shots on their own, motivated by raffle tickets, paid time off and other perks, if not by the consensus of the medical community.”

“In recent days, that tone has suddenly shifted. The Delta variant, a more contagious version of the coronavirus, is sweeping through the country. Fewer than half of Americans are fully vaccinated, exacerbating the situation… It all adds up to a difficult calculation for America’s business leaders, who hoped the country would already be fully on a path to normalcy, with employees getting back to offices. Instead, individual companies are now being forced to make tough decisions that they had hoped could be avoided, such as whether to reverse reopening plans or institute vaccine mandates for employees.”

The recovery that was juicing upwards is soon to face limitations.

Coronavirus cases have been rising nationwide and are back to their highest level since early May as the highly contagious variant spreads across the country. The sharp uptick has reignited fears of the pandemic, particularly as cases rise among young children who are unable to get a vaccine and even among those who have been fully vaccinated.

“If people don’t feel safe, they’re going to close schools. If people don’t feel safe, they’re not going to go back to work,” said Claudia Sahm, a former Federal Reserve economist. “The recovery — it’s going, but it’s still vulnerable.”

Getting vaccinated should be considered an investment not only in one’s own personal health, but also with society’s health. That includes the nation’s ongoing economic recovery efforts. State data from around the nation shows that when vaccination rates increased, the share of people working also rose.  More money in the engine of the country allows for more people to buy what they put off during the pandemic year.

Policymakers at the federal, state, and local levels must redouble their efforts to increase vaccination rates in order to secure these benefits and build on past successes. But for them to succeed the chuckleheads who thus far have acted liked petulant children need to step up and begin to act like an adult.

And so it goes.

Wisconsin’s Economic Realties In Partisan Times

The final sentence in two articles in the Sunday newspaper popped off the pages and are statements not only about the issues of the day which need to be addressed, but more importantly they speak to a deeper truth concerning the partisan times in which we live. Over the past few years the most confounding topic I have attempted to better understand is how facts and data matter less than partisan alignment. We are not talking about small details at the margins of the issues, but rather the stark bold facts right in front of the eyes of state residents.

From the Associated Press Josh Boak reported the following.

Marvin Murphy, the 80-year-old owner of Fox Cities magazine lamented that so many people only process the world based on what they see and hear on TV.

“Reality is is not the most important thing,” Murphy said. “The perceived reality is what’s important.”

The article pointed out that by almost any measure, Trump’s promises of an economic revival in places like Appleton have gone unfulfilled. The area has lost about 8,000 jobs since he got elected.

Meanwhile Tom Still at the Wisconsin State Journal wrote a column about a congressional bill which would ramp up funding for research, drive manufacturing and provide innovative tools for more places nationwide. It is precisely the type of legislation that should be talked about in light of a pandemic and difficulty with supply chains worldwide. Still’s final sentence is not about the substance of the bill, however, but the higher mountain to climb in this unsettled partisan climate.

Let’s see if our fractured political times can bring it into sharper focus.

We have all read and heard much about the political tribalism that has embedded itself into our system, and we know this is not the first time when reason or facts have taken a back seat to the needs of the state. But the depth of the canyon between reality and partisan perspective seems, from my observations, to be more pronounced than anytime in my nearly six decades.

I grew up in a rural part of Wisconsin that was primarily older, blue-collar, Christian and mostly Caucasian. My adult life has been spent in largely the opposite environment with urban, multi-cultural, higher educated, and upwardly mobile people all around. I know how to talk with both groups, but have not found the answer as to why the same facts about an issue can be presented but the acceptance of that data is so different. It is that dilemma which stresses our political system not only in Wisconsin, but nationwide.

The New York Times Sunday reported from Janesville where economic promises and hope-for renewal has yet to occur.

Lingering hopes that the factory would be resurrected were dashed when the final smokestack that dominated the 300-acre campus was demolished in 2019.

Several shipping warehouses eventually arrived, including a huge Dollar General distribution center. While some residents welcome the new jobs, others say they’re no substitute for highly paid auto work that once guaranteed pensions and lifelong health insurance.

So how do we talk about the data from multiple places statewide showing economic distress over the past years and not have it rejected out of hand by those on ‘the other side’ of the divide? We know the wise route as citizens, and the essential path for our future, is to find a bridge for the sake of our state. Having said, however, we need to ponder the impact of marginalizing facts for the sake of unity. That is a price too steep for us to ever take.

I do not have an answer for the complexity of how to marshal facts for those who simply reject them. But I do wish to end this column with an uplifting thought. I enjoy having conversations with those who vote and think differently than I do and find the best way to make headway is to talk in broad strokes, and from the larger array of ideas ‘on the table’, gravitate to the ones where common ground exists.  If the other person is open to that style of conversation a cup of coffee and an hour can make a difference.

As Wisconsinites that might be the best place from which to start at rebuilding our shared factual commonalties.