The same people who assured us that 18 months of accelerating inflation was transitory started pitching, a while back, that gasoline prices were down for the 657th consecutive day, or whatever the count was.
Blinded by what can only be politics and the need to tell a political narrative they deliberately chose not to look at anything that didn't further their storyline. And then reality smacked them, and worse, smacked anyone they counsel or advise right upside the head.
From Yahoo Finance, Friday, September 16:
This week in Bidenomics: Fooled by gas prices
America’s mood is improving, as gas prices decline. Pump prices have fallen by $1.30 per gallon since June, to a somewhat manageable national average of $3.70. Consumer confidence fell during the first half of the year, as gas prices were soaring, but confidence has improved since July. There’s no better indication that inflation is on the run!
Except, it’s not. Economists and investors thought the latest inflation report, released on Sept. 13, would show a definitive decline in the pace of price hikes, which would allow the Federal Reserve to ease up on interest rate hikes. A mellower Fed would be good for stocks, since lower rates generally mean higher profits.
Whoops. The annual inflation rate only dropped by two-tenths of a percentage point from July to August, to 8.3%. Many economists thought inflation might dip below 8%. The drop in gas prices did bring inflation down, but barely. Other types of inflation remain alarmingly high. Grocery prices are up 14%, year-over-year. Cars, 10%. Rent, 7%. Incomes, meanwhile, are only growing by about 5%. Ordinary people are falling behind.
There will be no respite for the Fed, now widely expected to raise rates by a muscular three-quarters of a point at the meeting that concludes Sept. 21. The Fed will probably keep hiking later this year, as well. Investors got too optimistic, which is why stocks fell hard on the disappointing inflation news.
Does this hurt President Biden? Maybe not. Gas prices drive consumer psyches, no matter what else is going on, simply because they’re the most visible price signal most consumers see. Gasoline only accounts for 3.3% of the typical family’s spending, compared with 34% for housing, 12% for food and 8% for health care. But gasoline is more volatile, with wide price swings that get people’s attention. When they’re high, it means something’s wrong. When they’re lower, things are better.
Rent only goes up once a year, if that. Most homeowners have fixed-rate mortgages that never change, and the record-low interest rates of the last two years allowed millions to refinance and lock in lower costs. Food is obviously a staple, but shoppers can substitute cheaper brands and economize in other ways, which they are doing....
....MUCH MORE
