Over the last few months, I’ve heard a steady stream of similar stories told by friends across the United States: various products and services are just more expensive right now. I talked with one friend recently who got outbid on ten different houses, trying to buy in the current red-hot market. Another recently posted about how buying milk in her area had shot up above four dollars a gallon, a price she deemed outrageous with a young child.
Of course, all of this doesn’t include the price everyone feels right now in the form of gasoline. The Bureau of Labor Statistics (BLS) says that gasoline prices are up 22.5% since this time last year. Part of this is due to the pandemic. Last year, prices around this time were artificially low as COVID-19 caused a plunge in demand for gas. But the price of gas has recovered above that point.
These anecdotal stories, which you’ve likely heard yourself similarly, aren’t isolated events and describe more general developments appearing.
The Wall Street Journal called the current housing market the hottest market in at least 15 years, saying, “The median price for existing home sales rose to $329,100 in March, a new high according to the National Association of Realtors. Prices soared 17.2% last month from a year earlier, marking the biggest price increase in NAR data going back to 1999. Steepening prices, combined with a scarcity of inventory that has left the U.S. housing market millions of homes short of buyer demand…”
Stories of people going, cash-in-hand, to any seller and immediately getting outbid by other buyers offering even more up-front cash is so familiar that it’s a part of internet memes. For the individual buyers, the process is soul-crushing. But the market has shoved millions to the sideline on the buyer’s front and made them renters, which has caused rent prices to go up as well.
According to the BLS, inflation isn’t a real issue right now. The Consumer Price Index, which measures prices across all consumer categories, including energy, is primarily flat. But there are spikes in certain areas, like gasoline and housing or rent prices. Those items aren’t things that can be ignored for long because they’re significant drivers of American expenses.
The Biden administration has kept a public demeanor of saying inflation isn’t that big of a concern. The administration has ignored or criticized any parties who have warned of inflation. But privately, it’s a different story.
The New York Times reports that the Biden White House is “quietly” keeping tabs on inflation, as they’ve pushed through significant COVID-19 relief spending and want to go further with a massive infrastructure spending plan.
Publicly, the Times reports of the Biden administration, “Armed with their internal data and conclusions, administration officials have begun to push back on warnings that a stimulus-fueled surge in consumer spending could revive a 1970s-style escalation in wages and prices that could cripple the economy in the years to come.”
But behind the scenes, it’s a different story in the White House:
Yet they remain wary of the inflation threat and have devised the next wave of Mr. Biden’s spending plans, a $2.3 trillion infrastructure package, to dispense money gradually enough not to stoke further price increases right away. Administration officials also continue to check on real-time measures of prices across the economy, multiple times a day.
While I appreciate the thoroughness, that kind of behavior is far from the confident and positive story the administration is pushing in public, especially when that behavior involves checking the real-time prices across the country.
Not included in any of these estimates are hiccups in global trade. Events like the hilarious story of a whole ship getting stuck in the Suez Canal will impact pricing and inflation estimates.
It’s too early to tell right now that we’re in an inflationary period. Still, there are certainly some concerning signs, and even the politicians have their ears perked up for issues. Predicting events like these are near impossible, even with the ingredients in place. It’s a little bit like trying to predict where a hurricane is going to land on the American coast and how much damage it could cost when the only evidence you have is of an early wave coming off the coast of Africa.
But as Congress debates infrastructure and more spending, it seems prudent to acknowledge this wave and the anecdotal stories of friends and family members getting priced out of things from houses to milk. As the late 1960s and entirety of the 1970s showed us, what begins as a trickle can grow into something worse if we aren’t careful.
Hopefully, nothing comes of these stories, and prices settle back down to reasonable levels. But if not, we can’t say the signs weren’t there.