DANIEL VAUGHAN: A More Expensive Fourth of July

What a difference a year makes. Last year, the Biden White House celebrated a brief dip in food prices around Independence Day. The punchline of the tweet was that the average Independence Day BBQ costs were down $0.16 compared to 2020. That was when inflation was transitory, and gas prices had recently gone above $3.00 a gallon.

For obvious reasons, the White House hasn’t posted a similar tweet this year. Unless you’ve been living under a rock for the past year, you know it’s more expensive every time you go to the grocery store.

Yahoo Finance explains how much most expensive it is this year compared to last: “This Fourth of July’s cookout will be 17% more expensive than it was a year ago, per a new report from the American Farm Bureau Federation (AFBF). A barbecue for 10 people will likely cost $69.68 on average, around $10 more than last year.”

Americans cut back.

And that’s a very basic meal. Most Americans will spend much more on festivities for the Fourth of July. The White House celebrated pennies but has little to offer when dollars fly out of people’s wallets. Eventually, people have to start making hard decisions on purchases for everyday items in grocery store aisles.

The Wall Street Journal reports that we’re already beyond that point. “Consumer prices increased at an 8.6% annual rate in May, marking a new four-decade high. Many Americans, unable or unwilling to stomach the higher prices, are starting to forgo some purchases and outings.”

The cuts are happening across income levels while hitting the poorest the hardest. “Consumer prices increased at an 8.6% annual rate in May, marking a new four-decade high. Many Americans, unable or unwilling to stomach the higher prices, are starting to forgo some purchases and outings.”

It’s not just everyday Americans feeling the pinch; cities and localities are feeling the pain too. Fortune Magazine reports that places like Minneapolis, MN, Phoenix, AZ, Sacramento, CA, and College Park, MD, have all had to cancel Independence Day celebrations for a variety of reasons.

Cities cut back.

Phoenix couldn’t find fireworks, saying, “supply chain issues prevented the city from acquiring professional-grade fireworks.” Minneapolis and Sacramento both cite supply chain issues and labor shortages, which prevent them from being able to run events. College Park, MD, blamed COVID-19 for their cancellations.

These are just the big-name cities everyone knows; smaller locales are dealing with the same issues.

The Fourth of July is a single-day microcosm of the more significant issues hitting Americans. “It’s all just another dent in a difficult summer, as returning to the era of carefree vacations has been slow in the U.S. Flights have been delayed and canceled at record numbers and public pools have been shut down, due to a labor shortage of both pilots and lifeguards. Meanwhile, inflation continues to surge to its highest level since 1981.”

And, of course, none of this includes a discussion of gasoline prices, which remain near all-time highs. Another Wall Street Journal report says, “The average price for a gallon of gasoline Friday was $4.84, compared with $3.12 during the same day last year, according to data from OPIS, an energy-data and analytics provider.”

Not to be left out of the travel issues, airlines are struggling to keep their schedules run on time. In the weeks leading into the Fourth of July holiday weekend, thousands of flights were canceled. Supply chains and labor shortages are contributing to headaches up and down the travel side of the economy.

From the frying pan into the fire.

The cherry on the top of everything heading into Independence Day is the Federal Reserve Bank of Atlanta’s latest projections for second-quarter growth of the U.S. economy. Right now, that model is projecting -2.1% growth. If that holds for the official GDP report, it will mark back-to-back quarters of negative growth.

As I wrote in my column laying out the case for why we’re already in a recession, while back-to-back quarters of negative growth isn’t an automatic recession, most people will consider it a technical recession. Unlike previous recessions, the Federal Reserve may not ride to the rescue to save the economy — inflation is their top mandate. Job losses will help the Federal Reserve kill inflation and fulfill its mandate, which President Joe Biden supports.

Here we sit a year later, after all the claims of transitory inflation and the “adults being in charge.” A year later, everything is more expensive, consumers are cutting back, and the economy is sitting in recession territory. The White House hasn’t posted a new BBQ tweet, they’ve gotten quiet with similar charts on gas prices, and they don’t have much to offer.

Americans are bearing the brunt of the Biden administration’s policies this Fourth of July. They’ll get to commiserate together while celebrating a more expensive Independence Day.