Empower Wisconsin | Dec. 14, 2022
By Jim Geraghty, National Review
If you asked me what the biggest stories of 2022 were, I would say the runaway inflation rate, the Russian invasion of Ukraine, and the midterm elections — with Elon Musk’s purchase of Twitter coming up fast at the end. But inflation only gets intermittent attention from the media when the U.S. Bureau of Labor Statistics releases updated numbers. On Tuesday morning, we got our last batch of numbers for 2022, indicating that inflation was at 7.1 percent in November — another very modest improvement, but still close to the highest rate in four decades. Once again, Joe Biden and company will celebrate this news as a great personal victory.
You Can’t Spin Inflation
From December 2011 to April 2021, the U.S. Consumer Price Index — what most people think of as the inflation rate — was less than 3 percent. A few months here and there the rate would reach 2.8 percent or 2.9 percent, but those bursts were short-lived. Annually, the CPI averaged anywhere from 0.1 percent to 2.4 percent, and for a couple of months in 2015, it was actually negative. Whatever else you want to say about the state of the economy during the later stages of the Obama era and into the Trump years, inflation was not a major problem facing American consumers.
The CPI came in at 7.1 percent. Last month, the figure came in at 7.7 percent. By the standards of that miserable stretch from March to September, when the CPI came in at above 8 percent or higher, November’s numbers are an improvement. But for squeezed American consumers marveling at prices they never thought they would see for holiday meals and spending more to buy less during their Christmas shopping, this is relief so modest that it can barely be felt — if it can be felt at all. Egg prices are 43 percent higher than they were a year ago. New-vehicle prices hit a new record. Home sales are coming down, but that’s because sales keep tumbling lower each month.
As my Three Martini Lunch co-host Greg Corombos noted, inflation compares the prices of November to the prices of twelve months earlier. But the surge in prices started in spring 2021, so prices are being compared to the already-higher prices of November 2021. In other words, we’re well into our second year of inflation, which makes those slight reductions in the rate of increase look even more modest.
President Joe Biden has two kinds of statements that he issues when the monthly CPI numbers arrive. When the number is so bad that there’s no way to spin it as any sort of progress, such as in June, he will first dispute the accuracy of the numbers: “Today’s headline inflation reading is unacceptably high, it is also out-of-date.” This is a dumb argument because it takes something obvious and insinuates that the same measurement that has always been used is now suddenly too inaccurate to be illustrative. Yes, it takes time — about a week and change — to collect and calculate the numbers. The national inflation rate isn’t going to change dramatically within a two-week span.
Then Biden — or, more likely, his economic and press teams — will look deeper into the report to find any figure that showed any sign of improvement: “Importantly, today’s report shows that what economists call annual ‘core inflation’ came down for the third month in a row and is the first month since last year where the annual ‘core’ inflation rate is below six percent.” Did you feel a sudden surge of relief from high prices in the month of June? No? Neither did anyone else.
Biden’s other kind of statement comes when the CPI numbers go down at all. In that scenario, Biden will spike the football and insist that he deserves the credit for what is happening, like he did for October’s numbers: “Today’s report shows that we are making progress on bringing inflation down, without giving up all of the progress we have made on economic growth and job creation. My economic plan is showing results, and the American people can see that we are facing global economic challenges from a position of strength.”
Biden did that for an inflation rate of 7.7 percent. Before this year, that figure would still be the highest in 40 years. The CPI ticking down a few tenths of a percentage point represents very, very modest progress in bringing down the rate of inflation. No one can feel any of that at the grocery store or car dealership or Home Depot.
Read more at National Review.