Politico: This Inflation Stuff Is Just Very Inconvenient To China Joe’s Spending Priorities

Seriously, it is very inconvenient. So what if your cost of living is going up? So what if you’re paying more now for just about everything? This could cause problems for Joe

Soaring prices draw both shrugs and screaming in Washington
A continued inflation spike could make it a lot harder for the president to push through trillions of dollars in additional federal spending.

The White House says it’s not concerned. The Federal Reserve is showing no alarm. Bond investors are chill.

But with consumer prices soaring at the fastest pace in more than a decade, some economists are joining Republicans in arguing that it’s time to drop the nonchalant attitude and start seriously worrying about inflation taking hold and possibly crushing the economic recovery from Covid-19.

And if the surge in costs for everything from rental apartments to airline tickets and used cars kicks off a wider inflation dynamic, it could make it a lot harder for President Joe Biden to push through trillions of dollars in additional federal spending while forcing the Fed into growth-choking rate hikes.

Really, that’s their concern? Joe spending trillions and trillions on unnecessary initiatives? Not “the citizens of the U.S. are seeing inflation eat into their paychecks?

Concerns over inflation were rekindled on Thursday as the Labor Department reported that consumer prices rose by 5 percent in May from a year ago, the quickest pace in nearly 13 years. The so-called core rate of inflation, which excludes volatile food and energy prices, rose 3.8 percent, the sharpest rise since June 1992.

Democrats and many economists say that since the numbers are year-over-year comparisons, they look worse than they are, given the severely depressed economic activity during national Covid lockdowns this time last year. And they note that much of the increase was driven by the rising price of used cars and trucks, as well as airline fares and clothing — all of which you’d expect as the country emerges from lockdown.

Well, of course they’re downplaying the inflation, even though inflation hurts the lower and middle class income people they need to win elections.

Republicans are increasingly seizing on every bit of inflation data to slam the Biden agenda and call for the Fed to stop pumping so much money into the system.

Seizing!

And many economists are sticking to their belief that the sharp inflationary pressures will be short-lived, especially given how much used car prices contributed to the most recent report.

“Vehicle prices alone boosted core CPI by 0.38 percentage points last month and by 0.32 percentage points this month,” Eric Winograd, senior economist for fixed income investing at AllianceBernstein, said in a note to clients. “That seems highly unlikely to be permanent—once shortages ease and production ramps back up, prices of used cars in particular should settle down.”

Let’s hope so. But, what is short term? Because there seems to be no change in the limited amount of used vehicles at this time. And this shortage has driven the value of used up quite a bit, like up into the thousands above normal. And for new the shortage means less discount off MSRP. Eventually, shortages will end, but, will prices come down? Particularly for food and other essentials. Or, will all the prices just stay the same? How about housing? Wood?

(NPR) Rising labor costs are pushing prices up in some areas, but officials don’t believe that’s the beginning of a runaway, upward spiral, like the U.S. experienced in the 1970s. Chipotle said this week it’s raising menu prices about 4% to help cover its new $15-an-hour average wage for employees.

Oops. Anyhow, this is tough for Biden.