Tag: economics

INFLATION IS RISING, OR IS IT FALLING?

by Ken Grossberger, PhD

Politicians love to spin reality into a self-serving interpretation. Inflation may be the number one topic in this year’s presidential election, and both Biden and Trump have contrived diametrically opposed stories. Both cannot be true at the same time, but this is the silly season. The key topic this year, as in most elections, is the economy.

Inflation is defined as too many dollars chasing too few goods, creating economic conditions whereby prices rise. There are a number of metrics for this but the most recent number being reported is 3.5% for March of 2024 (US Bureau of Labor Statistics, 04/10/24). The Consumer Price Index (CPI) is the most used term for inflation, a measure of the change in the prices of basic goods, and what we worry about most is food and energy (e.g., gas). When Trump left office, the CPI was 1.9% (Investopedia, 04/30/24). Under Biden the CPI rose as high as 8.0% in 2022 (Federal Reserve Bank of Minneapolis, 04/30/24).

So here’s the conundrum: the rate of inflation rose dramatically during Biden’s term but has since decreased. So far so good. But how do we word this? If inflation is currently increasing at a 3.5% rate, it is still going up. But it was rising at about 8.0%. So is it correct to state that inflation itself is coming down, or is it just going up less? It would be correct to say that the rate of inflation has come down since 2022 but it’s not factually correct to state that “today’s report shows inflation has fallen more than 60%…” (The White House, 04/10/24) inferring that the rate of inflation, and therefore prices, are coming down (thus things are getting better). Under Biden the price of consumer goods has constantly increased. To manipulate the wording to make it seem like the opposite is true, is to engage in the kind of political deception we see too often in today’s political environment. And Biden has said this many times, part of his Bidenomics mantra (a term he has recently dispensed with). Under Biden, consumer prices have increased by about 20% (Federal Reserve Bank of Minneapolis, 04/30/24). This has crushed the middle class and the working poor, who are struggling to pay for food and gasoline for their vehicles.

This is reflected in the political polls, which show Biden has lost about 6% overall since he won in 2020[1], and its worse in 7 swing states[2] (Wikipedia n.d.; RealClearPolitics 04/30/24). He is on the defense in every swing state he won in 2020, and if the election were held today, he would lose most of them, and with them the election. Clever arguments about the economy, and treating the electorate as morons, will not win him a second term.

References:

Federal Reserve Bank. (04/30/22). Consumer Price Index 1913-. https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913-

Investopedia. 04/30/22. Average Yearly Inflation Rate by President. https://www.investopedia.com/us-inflation-rate-by-president-8546447

RealClearPolitics. 04/30/24. RCP Poll Averages. https://www.realclearpolitics.com/

The White House. 04/10/24. Statement from President Joe Biden on the March Consumer. Price Index. https://www.whitehouse.gov/briefing-room/statements-releases/2024/04/10/statement-from-president-joe-biden-on-the-march-consumer-price-index-2/

US Bureau of Labor Statistics. 02/06/22. Consumer Price Index Summary. Consumer Price Index Summary – 2024 M03 Results (bls.gov)

US Bureau of Labor Statistics. 04/10/24. Consumer prices over 7.5 percent over year ended January 2022. Consumer prices up 7.5 percent over year ended January 2022: The Economics Daily: U.S. Bureau of Labor Statistics (bls.gov) 

Wikipedia. (n.d.). 2020 United Staes presidential election. https://en.wikipedia.org/wiki/2020_United_States_presidential_election#:~:text=Biden%20ultimately%20received%20the%20majority,Bush%20in%201992.

[1] Biden beat Trump 51.3% to 46.8% in 2020, a margin of 4.5%, but in the RCP average Trump currently leads Biden in a 5-way race (including the third party candidates) by 1.6%, showing a statistical shift of 6.1%.

[2] As of this report Trump leads Biden by more than the margin of error in Arizona, Georgia, North Carolina and Georgia; Trump leads Biden in Wisconsin, Michigan and Pennsylvania but within the margin of error.  This is based on an average of recent polls.

The Big Dance

The art of lying is such a staple of politics that we accept it as a natural act, like the rising of the sun. Thus most national elected officials have dismal ratings in the polls: the President, Vice President, the leaders in the Senate (both parties) and the leaders in the House (both parties). Trust is a thing of the past and many of those who vote strain to choose the least damaging of the worst.

The Biden team is an example of such deceit, on steroids (as the President likes to phrase things). So he clearly thinks he conjured up the big rhetorical flip taking the Republican-manufactured sarcastic term “Bidenomics” and now uses it as a symbol for this miraculous economy he keeps touting. As his team cherry picks through the data for good stuff (“it’s working” Biden whispers) and ignores the bad stuff (e.g., huge spikes in the cost of just about everything and the dramatic increase in the national debt), he is performing the rhetorical choreography of the “the big dance” designed only to make his administration look good. So Bidenomics is better termed Bidenoptics. Every time he whips out his Bidenomics double talk, he is dancing. The border is closed, he knew nothing of Hunter’s business deals, etc. He continues to dance through the political tulips.

Even more embarrassing is White House Secretary Karine Jean-Pierre’s recent statement that the record setting sea of illegal immigration at the southern border in December is typical for the end of the year. Or “we need Congress to pass comprehensive immigration” as an excuse for the dramatic increases in border crossings under the Biden administration. These deflections are in line with today’s political word games, based on the dance, and not the truth. The American public is being waltzed down the proverbial road because the Biden team, like too many politicians, will continue to blame the person who put the cookie jar on the kitchen counter, not the person who put his hand in it. The same goes for the economic scene where Bidenomics has hit the middle class and working poor pretty hard. The White House excuse machine is not going to talk people out of their pain with some not-so-clever reverse sloganeering. Politicians have a political blind spot: all they have to do is get the right frame, the right explanation, the palatable clarification or the rhetorical justification, and no one will notice that what they say just isn’t true. They’re dancing, and we the people get a continuous show.

Is there a day of reckoning coming? Will the voting public finally reject the old school politics of deception and vote the rascals out? Are voters finally exhausted from the dance and looking to demand substance only? Lincoln might not fare well in today’s political environment, Franklin Roosevelt might. Reagan did. Carter didn’t. But those leaders were from different eras where there was at least a modicum of civility and restraint. Not that they didn’t have their own brand of shenanigans, or rhetorical sleight of hand. But nothing like the psychotic rearranging of reality of the Biden-Trump era.

Will this be the election cycle where voters dump the fibbers and elect the truth tellers? Perhaps the adults in the room will manifest themselves in such a way that this election will be more about self-interest and the needs of the county, and not power and cosmetics. But in the meantime time the big dance continues.