A reader points me to an Adam Tooze substack today about inflation. Tooze admits that even his own personal reaction to inflation hasn't matched the dry reports from the BLS:
Because, yes, I actually do live in America and I have experienced what has happened on supermarket shelves. Several times I’ve been brought up short by jaw-dropping price hikes for everyday items — milk, fruit, veg, a cup of coffee, a loaf of bread, toothpaste etc. There’s been a price shock, all right. On the ground, in day to day life it feels far more serious than the data that dominate the macroeconomic policy discussion would suggest.
Tooze suggests the answer lies in "anti-core" inflation—that is, inflation for only food and fuel, which is the stuff consumers notice the most:
Anti-core inflation skyrocketed in 2021-22, which explains the mystery of why people feel worse about inflation than the official figures suggest they should.
But there's a problem with this: it's really just gasoline. During our recent inflationary surge, food prices went up only slightly more than overall inflation. It was gasoline that more than doubled, and it's no mystery that consumers reacted strongly to that. It's practically a cliche that gas prices determine presidential elections.
The other part of the explanation isn't food per se, it's that we humans are wired to overreact to outliers. One huge increase gets seared into your brain far more than a dozen modest increases. Here are some selected food items:
Overall food inflation was roughly 14% in 2021-22. But look at the outliers! Eggs up 83%. Margarine up 54%. Pop Tarts up 27%. Coffee up 21%.
And even this hides some large, but very temporary increases caused by shortages or plagues or whatnot. Those things might not last long, but they stay with you, especially if other prices are all going up too.
So that's my guess. It's not anti-core that explains things so much as gasoline + food outliers. Add in some broad math illiteracy and you've got lots of people who "feel" like prices have doubled when, in reality, they've only gone up 14% once you consider that, for example, eggs actually make up a minuscule part of your spending.
But that's logic. It's not how emotions are born.
POSTSCRIPT: Plus, don't forget that we have a vast right-wing network of politicians, pundits, and media that have a strong interest in blanketing voters with alarming news about "Joe Biden's inflation." That has a bigger impact than it's given credit for.
"Why has recent inflation been so unnerving?"
Becuase the media did its best to make it unnerving.
The media, the social circle, the echo chamber. The narrative for a long time has been that inflation is out of control and it's Joe Biden's fault. Even if you suspect that's not right, after so many times of paying twelve bucks for a combo meal that used to cost less than ten, you may start to think there's something to it.
No one ever hears the counter-narrative, that the pandemic broke the supply chain, Joe Biden had nothing to do with it, and the inflation problem will be (and has been) fixed a year or two later. And by the way, people have a fatter paycheck and food is now more affordable than it was in 2019.
Inflation was a problem under every president from Nixon to Clinton. The problem was bigger and more persistent then, and if there was anyone to blame, it was usually OPEC and those damned Arabs. Presidents might have been hurt politically by high inflation but I don't recall them being blamed in the same way Biden has in recent years. Now if you don't like the price of milk, you know whose fault it is. Biden is still so toxic his own VP is being pressured to separate herself from one of the most successful presidencies in memory. It's nuts. People will look back on our time and think, What a bunch of crybabies.
Don't forget that gas prices were also affected by the invasion of Ukraine by Trump's pal Putin, and that egg prices were affected by outbreaks of bird flu. It would be easy for the media to mention these things, but they don't because it's so much more fun to blame it on whoever happens to be president (and who has essentially ZERO responsibility for these prices).
Btw, another note on the idea that what people talk about is not reality.
Nicholas Brown:
Two years ago today.
[Oct 17, 2022]
Forecast for US Recession Within Year Hits 100% in Blow to Biden
The recession that never was. Repeat the nonsense enough and you start being scared of your own shadow.
October 2022, btw, was the bottom of the market. A great time to buy stocks.
I place a lot of blame on folks like Larry Summers with his doom forecasting that if Biden signed the various stimulus packages we'd all be screwed. This gave permission for the mainstream media to pile on by highlighting every piece of bad news without any context.
That is SO SO right! Two other things of note:
1. The price of gas has such a huge impact because people SEE it on huge signs every couple of blocks when they drive anywhere. That is not the case for ANYTHING but gasoline.
2. It's not only the right-wing media machine, but the mainstream "liberal" media that just LOVES to use words like "skyrocketing." During 2022-23, every night on the TV evening news, the top story would be about the "skyrocketing inflation" followed by a video clip with some lady at a gas station talking about how she can't make ends meet. Makes you wonder how many people were interviewed before they got the scary one the producer wanted.
Gas prices are particularly unnerving because for many people they are right in their faces multiple times per week as they fill up to get to work, and there is nothing they can do to avoid paying the price short of quitting. Plus, many people are driving big trucks and SUVs with very large tanks. They were looking at an extra $20 or more at every fill up. In my own personal experience, suppliers of certain services used inflation as an excuse to jack up prices exhorbitantly. The car repair went from being $500 to $1,000, with the easy excuse that it was "inflation."
"there is nothing they can do to avoid paying the price ... driving big trucks and SUVs with very large tanks"
Uh, don't drive a big truck or SUV if you want to avoid paying the price.
The jerks who "are driving big trucks and SUVs with very large tanks" got exactly what they bargained for. I'd like to see gasoline at $10 per gallon and the SUV pilots sobbing by the side of the road. They'll grind up fewer pedestrians in the under-carriages of their tanks.
Haha!
Exactly.
I"ve had to do cross shopping to force some prices back down, like, I know how inflation works but unless I really really like your product jack it 50% and I'm looking elsewhere or skipping it this month.
You have to be commuting a very long distance to need to fill up multiple times per week to get to work, especially if you're driving a big truck or SUV with a very large tank.
Does the increase in the price of eggs due to inflation or the problems the farmers have been having with bird influenza? Seems I'm always seeing a note in my supermarket regarding that issue and why eggs are going up in price.
The Washington State Attorney General's office sued some major chicken and egg cartels (also salmon producers). In the case of the chicken and egg producers, they were trying to blame the shortages on avian flu.
Turns out there had been SOME price gouging going on for quite a while, but the producers got a LOT greedier a couple of years ago and took the opportunity to raise prices WAY above actual production costs.
They then boasted to their investors about their huge profits - and the WA AG's office was not the only one listening... Several other state AGs sued and raked back some excess profits.
I commuted 120 miles a day for years.
Outliers? That's a list of fairly critical groceries -- eggs, bread, coffee, cereal, lunchmeat. No wonder people are reacting badly.
Combine that with the number of Americans living paycheck to paycheck without much savings and a sudden jump in the weekly grocery bill will rightly make people freak out. And, no, pedantically explaining that they're wrong is not the way to handle it.
Exactly. I just made a similar comment below. That list of items that increased between 20% and 83% make up a big portion of the the average person's shopping cart.
Proof once again that America is NOT Lake Wobegon: most of the children are below average. On that list of twenty things, exactly four are even potentially "healthy" [eggs -- depending on one's LDL cholesterol -- lettuce, frozen vegetables and whole chicken] and two possibly so, depending on the brand and its level of salt and preservatives, [soup and canned vegetables].
Flour is generally healthy for most people, but it represents a tiny fraction of the average family's grocery purchases.
The rest of it is killing people, so rising prices might prompt them to improve their choices.
Yes. They are common items, but outliers in price increases.
If you have to buy those items every week, they're not outliers in your experience.
None of these things is required to live.
Kevin states food inflation was up 14% in 2021-2022. But the chart right above that line lists 17 staples that increased between 20% and 83%. That 14% may be the average but it doesn't necessarily represent the average basket of items consumers purchase on a regular basis. If those staples that we purchase week after week all had a 20% or more inflation rate than that is the impact we feel.
No, the 14% represents exactly the basket of goods consumers purchase on a regular basis.
Thank you for pointing this out. Yes, Atticus, that is exactly how price indices work.
The kicker is what are the odds of any of this changing dog forbid Trump wins?
There may not be big problems, but you only need one example that people can relate to so it feels like a really big problem. People won't really notice modest price increases on items, that's how it's supposed to be. But a few outliers, and the hair's on fire!!!
Trans inmates get health care in prison, as does everyone else. But you just need one violent offender to get that treatment, and Republicans are off to the races.
As for addressing these issues, if you're explaining, you're losing.
Counter programming, a version of Morning in America....
Some people say America is a hellscape. We say it's the greatest country on Earth.
We believe in America.
Some people like to talk about infrastructure bills. We actually passed one because
We believe in America
Some people like to talk about standing up for workers. We actually did.
We believe in America.
Do you?
Join us in building a better future, 'cause we're not going back.
That's exactly what the Harris campaign is trying to get through to voters, but, as Mencken said, "No one ever went broke underestimating the intelligence of the American people."
I'm not in a swing state, but I've not seen much positive messaging. There was the "we're not going back" around the convention, then nada. Nor have I seen any ads mocking Trump for saying "I saw it on TV" or ads mocking Vance for whining about being fact checked. The copy writes itself.
It's not going to be about we got all these generals to say Trump is scary, or we got all the Republicans who are against Trump and for Harris. Have a couple watching Trump on TV and mocking him for believing everything he sees on TV. In later commercials, have them go after Trump for having fentanyl blow up under his watch. Then go after him telling people to inject bleach, etc. Separate commercial, Harris can explain how it's important for the commander in chief to get the facts straight.
Trump sets the media's agenda with Xits. Have a commercial that mocks him, he will take the bait.
I think Kevin is basically correct (as usual!), and as others have pointed out these are items that are (1) very common purchases and (2) in people’s faces on a weekly basis, so disproportionately upsetting. And the MSM has also drummed on this relentlessly. I also suspect that “the economy” is also a placeholder in many people’s minds for “changes I don’t like”: in addition to higher prices this might include more immigrants, Covid-related fears/resentments, greater visibility of LGBTQ, more women/minorities in power, etc etc. See Toffler’s Future Shock: rapid major changes really do freak people out, and sometimes then they look for a strongman who promises to make it all go away.
What others have said about items that people must purchase frequently, plus....
I suspect a big part of the trauma was also simply that problematic inflation had been absent for so long—it had been some forty years since we had last seen it. That which is new and unfamiliar tends to be scary. People were traumatized in a way they weren't, say, in 1979, when inflation had been increasingly problematic for a good decade.
Finally, inflation was taking off just as stimulus payments were ending, so, for many folks higher prices arrived in force just as their incomes were dropping. Yes, many of them had banked a good part of that cash, but seeing one's savings dwindle as prices move ever upwards is an uncomfortable feeling.
The first thing is exactly what I was coming on to say; perhaps the majority of Americans never experienced perceptible inflation. The fact that it was on some of the most visible and frequently purchased items put it in people's faces more and therefore compounded it.
The median age in the US is 39. Other than the inflation spike due to Gulf War, it has been a long, long time since we had inflation and high(er) interest rates in tandem. Like so long there are few people alive working during both instances.
To put that another way, if you're under about 45 you've never really experienced noticeable across-the-board inflation for as long as you've been paying attention to prices. Maybe even if you're 50.
That's a really big chunk of the adult bill-paying population, and that experience is really easy to underplay and overlook, and hard to related to, if you lived through the great inflation of the 70s.
I suspect a big part of the trauma was also simply that problematic inflation had been absent for so long...
Inflation was not only low during the long, slow recovery from the 2008-09 recession, it was too low. Despite the efforts of the Fed (multiple rounds of QE, e.g.), the economy never got back to "normal." The culprit, imo, was austerity. The lack of fiscal stimulus after the 2010 midterms extended the era of slow growth and people's expectations got reset to thinking near-zero inflation was good when in fact it was a sign of an unhealthy economy.
In 1984, the country gave an old and often doddering president a landslide reelection victory, despite an economy with inflation that was higher than today. In 2024, our old president has been kicked to the curb, even though inflation is now quite a bit lower. One difference is that inflation was too high during the decade before Reagan and too low during the decade before Biden.
The BACON! Don't forget the BACON!
I never forget the BACON - I make my own...
In my 20's I had a roommate who worked at a meat packing plant, a pork processing facility. He often brought home bacon. Granted, it was ends and pieces, not the nice rashers, but still. Bacon! For free! A couple pounds per week!
It was a wonderful time in my life.
It's also because it came at the end of a decade of low inflation and near-zero interests rates, cause by the great recession of 2008. It was inevitable that inflation would have to come back eventually, but I guess many people didn't think so.
I've been saying for a while that especially food inflation was real as evidenced by grocery and restaurant prices but Biden didn't cause this. I'm not sure the average uncommitted voter understands that but inflation as a whole has gotten better. Whether the Inflation Reduction Act had anything to do with it or not Harris needs to hammer home that Trump's plan for inflation will make matters worse. Combine that with raising taxes on the middle and lower class and maybe it does change some minds
How often have you heard people talk about the high price of something, even when inflation was low? It's human nature. Commodity prices go up and down all the time. If an item goes up in price, people notice and fret about the high prices. If an item goes down in price, people will stock up, knowing that the price will soon revert to its previous level. It's just a bias programmed into our brains that psychologists have studied for decades - risk avoidance. We'll forgo large gains to avoid much smaller losses.
Gasoline, at the pump I go to, is now the cheapest it has been in probably 20 years.
Is anybody talking about this? Not only did the price of gasoline fall back to what it was in 2020, it kept going lower.
"Plus, don't forget that we have a vast right-wing network of politicians, pundits, and media that have a strong interest in blanketing voters with alarming news about "Joe Biden's inflation." That has a bigger impact than it's given credit for."
Yeah. That's a huge part of the forces pushing our quasi-democracy towards quasi-fascism.
My woke daughter makes me buy the organic pasture raised eggs. I'm pretty sure they didn't go up 83%, and their price has since fallen.
And I now have an electric car, so I love to see high gas prices.
The only inflation that I really notice is the price of going to the diner/cafe where prices are up around 20% to 25%, a big chunk of which I think is a wage increase for the workers, so I don't mind it so much.
This explains why the elites are so out of touch with the emotions of the lower middle class.
The price of eggs has tripled for me in the last couple years. A dozen extra large eggs at Publix used to be $2.09. They now fluctuate between $5.00 and $6.25. It really is crazy.
Weird, that's how much I usually pay for local, organic, brown, eggs. It was $7.99 yesterday, but I don't need to buy them every time.
Maybe you should check other stores. There a Trader Joe's near you?
There's is. And we go there semi-frequently so I'll check it out. (Thanks for the suggestion.) Fortunately, we're comfortable enough that even tripling in price isn't going to have a big impact on us when we're just talking about a few dollars. But for families that are already stretched thin and maybe eat a lot of eggs it could be a pain point.
Publix, the chain that "made" Boar's Head. Caveat emptor.
"Made" as in "brought to prominence", not "created".
Publix deli does make some great subs.
I used to think of Boar’s head as a “premium” brand. If you haven’t seen the recent stories about the listeria deaths caused by Boar’s Head you should look it up. Put me off deli meat entirely for the moment, and I’ll never knowingly buy Boar’s Head again.
That's what they want you to think. But, really, the company logo is a demonic pig. Truly, truly, "caveat emptor".
I did see that. But I believe it was only liverwurst from one processing center. Lunch meat is lunch meat and can only be so exceptional. I do think Boars Head is pretty good though. Although the Publix deli brand sweet ham is my favorite.
The thing that got me was how filthy the processing plant was and how the company covered things up. They ended up closing the processing plant. I read that one of the people who died was a Holocaust survivor. What a weird way to die after surviving something like that.
Bird flu has wiped out chickens in a number of areas a few times of the past few years, and that dictates the price of eggs.
The price of eggs has fluctuated wildly over the last couple of years. From two to five dollars.
https://fred.stlouisfed.org/series/APU0000708111
But as I’m sure you know, this has very little to do with inflation and a lot to do with bird flu. I suppose this also affects prices of other foods that are made with eggs.
are you related to oklahoma milk lady?
You do realize that organic eggs are not natural, right?
Oh go ahead, explain it to us like we're 5 ....
The economic facts and data are perceived differently than in the past - people's opinions about the economy used to agree reasonably well with the data - because of the increased partisanship. Trump makes up things about the economic data, claiming that everything is worse during the Biden administration, and in case of the national unemployment rate for example most people can't judge the truth from personal experience, but when it came to inflation there were actual price increases that people could personally relate the claims to.
The first thing about current politics that has to be understood (but is rarely acknowledged by the media) is that millions of people are voting for Trump because he is clearly an advocate of White Christian Supremacy. You can argue about whether he is a fascist, but fascism is not really what people are voting for. But it is not yet socially acceptable - in public - to admit to racism (they do admit to Christianism disguised as "religious freedom" and to some degree openly to Male Supremacy). So most MAGAs will give excuses for why they vote the way they do. At this point they will seize on anything, fact or fiction, to justify their partisanship.
As Kevin says the right-wing media are an important element in stoking the partisanship and in promulgating specific distortions and fictions, but this partisanship is something that Republicans have been working hard at for over fifty years - the campaign of dividing lower-income people on race and religion wasn't invented by either Donald Trump or Rupert Murdoch.
This, exactly. MAGA's wallow in their resentment; they're the smartasses at the back of the room in high school snickering at the "nerds" up front and randomly throwing spitballs forward.
The nerds now make five to ten times as much as the spitballers and the losers are pissed about it enough to destroy the country.
Inflation is a catastrophe! Interest rates must go up to stop the economy, cause massive unemployment, and a deep recession!
Or not.
"After adjusting for inflation, household net worth is up by just 0.7% through Biden's first three years in office, whereas it was up 16% in Trump's first three years."
Potentially, the aforementioned is a core element to dissatisfaction with the Biden economy/better rating for the Trump economy, pre COVID.
While I dislike using Fox as a source, I can't find the original article from the Wall Street Journal. Further, I have not seen an article that materially disputes the math quoted above.
https://www.foxbusiness.com/politics/inflation-flattens-americans-wealth-gains-under-biden-report
For what Faux claims to be true, the gains in the stockmarket alone must be a lie. Sure, not all households participate directly in the gains of the stockmarket. They're hidden in a 401K that is essentially out of reach until they retire. But roughly 55% of households have some of that 401K appreciation.
Also, housing has vastly outrun even the elevated levels of inflation since the widespread adoption of Work From Home. Over 65% of Americans own their homes, so they've participated in that.
These two reservoirs of wealth have outpaced inflation since 2020, so how can the net gain in wealth be "0.7%"? This is not just a "lie", it's a "Damned Republican lie", the worst kind.
Anandakos I am a bit confused by your response.
First, as a reminder, the core finding was from the WSJ and not Fox News. As for the impact of assets such as 401K or a residence, are you claiming that wealth is not real? While volatile, items such as capital appreciation of a home are a common form of wealth creation.
Or is it your point, these forms of asset appreciation are illiquid? There is a robust industry around refinancing and home equity lines of credit. Similarly, many borrow money against retirement assets.
Of course, because the date is based on average, there certainty are many in the universe who are not home owners, or even have meaningful retirement assets.
My point is that the statistic really can't be true. For sure, 401K's are pretty tightly locked up -- there are a few non-penalized uses, but not many -- and taking home equity for consumption uses is tantamount to building yourself a hamster wheel. So gains in those things don't feel like "wealth" as much as increases in annual income do.
I'm just saying that given that more than half the nation has some form of asset that participates in the general increase in asset value, and both major drivers -- the stock market and home values -- have exceeded the erosion in value from inflation, the statistics are baked in some way to make them look worse than they are.
The alternative is that the losses to the 45% of people who DON'T participate have in total been greater than the gains of the 55% (less that 0.7%), and since the 45% didn't have much if any "wealth" previously to erode, it simply CAN'T be true. Somehow or other the WSJ is doing a switcheroo and claiming that inflation-adjusted "income" or cash flow is equal to "wealth".
Also, the article is from late May. That's not all that long ago, but the Dow up 10% since then.
Funny how they just completely ignore Trump's last year in office. Or does that not count because it destroys the narrative?
ColBatGuano I am not glossing over anything. Rather, I am trying to under this paradox: why do so many people, including a shocking number of Democrats, trust Trump more on the economy?
Do you happen to have a better insight?
The original WSJ article, as linked from your Fox News reference, is at
https://www.wsj.com/economy/stock-market-performance-biden-trump-charts-1a83371b
Let's be aware that the median-wealth household has a tiny net wealth. That 0.7% figure is based on wealth that overwhelmingly belongs to the top 1%. Average consumers would not worry about it.
When quarantines ended upper middle class Americans exclaimed no matter how much anything cost they were willing to pay it so they could resume consumption. Retailers accommodated these consumers by raising prices beyond the rise of their costs. Prices were higher than they should have been and for a longer time because the market responded to the exaggerated demands of their most affluent customers. Minimum and median wage earners suffered from this market lacking price competition, making them susceptible to the claims inflation was caused by the policies enacted to support hourly wage earners during the pandemic. Claims made from the class which derives much of its prestige from conspicuous consumption and the class which produces political leaders.
Bird flu isn't going away. We can expect future outbreaks to hit eggs hard, and it's likely other animal products could be affected. It already infects cows, and it could easily mutate to make cows and pigs seriously ill.
My calendar is at 2024 now, not 2021 or 2022. And food inflation has been averaging 2% a year for the past two years. That's fine. Now, the 2021–22 outliers from Kevin's chart matter to me, even if they haven't gone up so much lately, but they aren't breaking me. Most of the outliers aren't things we buy every week. I like coffee, but I might spend fifteen bucks on it every couple of months. It's not a big deal. I could easily unsubscribe from a couple streaming services and use the money to cover my egg expenses, too, no problem.
Another good reason to ban internal combustion engines, they promote irrational panic.
And that's probably part of why wingnuts love them so much.
Hah!
Convicted criminals strongly pro-Trump,
https://www.rawstory.com/trump-remains-very-popular-among-prison-inmates-survey/
I'm really tired of people complaining about the cost of gasoline. It collapsed during Covid when tankers full of oil were swinging at anchor, refineries were shut down because the storage tanks were full, and you could buy 30,000 barrels of crude for less than nothing if you had a place to store it. Was that a happy place to be?
Around 2022 I was riding with a fellow who talked about the high price of gas. It was around $3.17/gal...way up from the depths of the Covid recession. I pointed to a gas station that got killed when they cut off it's business when they 4-laned US-76 into Timmonsville from Florence. Y'all know the place. It wasn't the cheapest, but it was pretty close and was the last place you could pump your gas, then walk into to pay. They didn't assume you were a criminal.
Well back in 2016 or so their price was $3.19/gal. SC has raised the gas tax by 14 cents/gal since then. So $3.17/gal in 2022 was 16 cents cheaper than in 2016. A couple of weeks ago I bought gas for $2.65/gal.
I just don't understand this collective loss of memory of pretty recent events. I'm a pretty ole codger now and understand fighting to remember a name or event, but sweet Jesus...what the hell?
It’s pretty much not ever worth arguing facts or reality with idiots. They’re just going to believe whatever they feel like believing. And you and I pay the price for that.
There’s only one solution here.
The simplest explanation is that we haven't had a really serious bout of inflation since all the way back in the early 1980s, and most of the population is too young to remember it.
You're kidding me, right? Calling that a modest increase and suggesting eggs are a miniscule part of one's budget is an insult to people who cook at home.
If in one year the price of the most commonly purchased grocery items shot up at least 20%, of course lots of people would be upset, especially if, for the past decade+, the annual rate of food inflation was more often than not, below the Fed 2% target.
https://fred.stlouisfed.org/graph/?g=1wgs1
How many fucking eggs are you eating?
I’m my household of three we buy a package every few weeks.
Maybe get a better diet.
Wow! Kevin unleashes the "I'm logical, you're hysterical" taunt. I've not seen him rude until now. It's surprising.
RE: Overall food inflation was roughly 14% in 2021-22.
Hey, look at the shortened time frame! BREAKING: I keep track of all my monthly food expenses (and I don't purchase eggs) and from 2021 to 2024 there has been a substantial rise in costs. I moved from $250/month to $350 (early years were responsible for most of it; things have flattened in the last 9 months). All grocery stores (no restaurants) with bread, broccoli, tomatoes, tuna, and condensed soup accounting for most of the expenses. No Pop Tarts. No coffee.
Q: Are my expenses that I track in a spreadsheet "emotional numbers"? Should I include Xanax in one of the cells? Help me out, please.
Q2: Is my Excel spreadsheet exhibiting "math illiteracy"? Did I miss a critical update?
Instead of pretending to be a scientist, maybe try acting like one.
How did you control for your spending being approximately the same? Are you buying the same brands? The same amounts? Were you forced to buy different brands or different amounts during the pandemic or during the supply shortages since? Were you buying more of certain things to “stock up”?
Oh wait you didn’t do ANY of this.
You just write some numbers down and then whine like a little bitch about it online later.
If those aren’t “emotional” numbers, I dunno what else you’d call it.
Nothing more ignorant than someone with just a small amount of knowledge.
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