The economic turmoil we have lived through in the last 16 months, since the onset of the pandemic in the United States, has been unlike anything most of us have experienced in our lifetimes. Thankfully, we are on track to recover.
There is, however, one lingering concern we should be mindful about – inflation.
Americans old enough to remember the Great Inflation that began in the 1960s and persisted throughout the 1970s can recall how dramatically our lives and economic activities were altered when prices rose and supplies diminished. It’s a recipe for real hardship, worry and frustration.
Wage and price controls and even rationing were instituted to help alleviate pressure on the economy. The cost of living soared. Prices of gasoline, meat, clothing and more skyrocketed.
The challenge stretched into the 1980s and inflation peaked above 10 percent before declining to manageable levels.
Our economy today is clearly rebounding after a prolonged period of closures and suppressed opportunities. As schools and businesses have reopened, and vaccines have become more widely available, pent-up economic demand has begun to surface in a noticeable way. But there are warning signs that we should heed when it comes to the approach we take to our spending and monetary policies.
Case in point: in April of this year, the Consumer Price Index was 4.2 percent higher than at that point in 2020. In May, it was five percent higher. This data tells us the cost of goods like gas and groceries have risen well above the average rate, and we don’t have to look far to see the evidence that supports this conclusion.
Prices of basic necessities like gasoline and food – both groceries and dining out – as well as other goods like semiconductor chips that are critical electronics components, including in our increasingly high-tech automobiles, and even lumber have risen. This surge in prices makes life difficult for many, but particularly for low-income families that already struggle with a lack of disposable income.
In a recent Fox News poll, 83 percent of respondents said they were extremely or very concerned about inflation and around 70 percent reported that recent increases in the price of groceries and gas were a serious hardship. Another contemporary survey found that, among those interviewed, 72 percent said their incomes had not increased while 86 percent said they are experiencing price increases.
Consumers aren’t the only ones dealing with higher costs. Businesses are feeling the effects too. The supply chain has experienced numerous pressures and complications, causing delays and shortages that eventually result in reduced profits or costs that get passed onto consumers.
As these indicators persist, we should recognize what they could mean for our economy more broadly.
Even now we should begin to consider the drivers of inflation and what can be done to mitigate or unwind them. Policies championed by the Biden administration are contributing to the rise in prices at the gasoline pump and along grocery store aisles. Hampering domestic energy production, pushing for tax increases on job creators and proposing record deficit-level spending are all factors that can and do push prices up.
It’s time for the president and his allies in government to read the warning signs and adjust their agenda accordingly. Americans shouldn’t be forced to deal with higher costs and scarce resources because of runaway spending and misguided policies that hit families where it hurts most, their pocketbooks.
John Boozman is a U.S. Senator from Arkansas. He is a Republican.