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03
Sun, Jul

Americans Are Obsessed With Inflation - What Really Drives It?

THE EASTSIDER – Just turn on the TV, or go online, it doesn’t make much difference. 

Americans are increasingly convinced that their economic woes are due to “Inflation”, and somehow President Joe Biden is responsible. 

Part of this is understandable.  Whoever the President is, he or she is holding the bag for how Americans ‘feel’ about their economic security.  Lost in the oversimplification, however, are the real forces behind the label. 

The Media

Gallup, the big  polling & consulting company, says that: 

  • “17% name inflation as nation's most important problem; 4% cite gas prices
  • Mentions of the coronavirus as top problem are lowest of the pandemic
  • Six in 10 worry a great deal about inflation, leading most other issues

WASHINGTON, D.C. -- Roughly one in five Americans mention the high cost of living/inflation (17%), or fuel prices (4%) specifically, as the most important problem facing the U.S. today. Together, these account for over half of the economic issues that 35% of Americans cite as the nation's top problem. Within that group, 11% identify the economy in general as the chief problem.

Meanwhile, 68% of adults name one of several noneconomic issues as the chief problem. This category of concerns is led by various criticisms of the nation's government and leadership (22%) and the situation with Russia and Ukraine (9%).” 

Forbes, the financial gurus, say the same:

“Twenty percent of Americans have drawn from savings more in the last few months than they typically do, according to the latest Forbes Advisor-Ipsos Consumer Confidence Biweekly Tracker. And 20% said they’d spent more money in the past few months than they usually do.

Those rates have been steady since Forbes Advisor and Ipsos first asked participants about their spending and saving habits in December, indicating that households continue to turn to savings to manage rising costs.

However, 21% of respondents said they’ve paid off their loans or credit less than they usually do.

The survey, conducted by Ipsos, measures consumer sentiment over time.

Chris Campbell, chief strategist at corporate risk consulting firm Kroll, explains that direct aid to American households during the pandemic gave the average American family a bit of a cushion in savings. But people started drawing from their savings accounts in the later stages of Covid last year.

“The average American family is having to make difficult decisions,” Campbell says. “They’re not getting paid more, but they’re facing [price] increases in staples, like gas and food.” 

And, between TV, alternate reality channels, and even the print media, it’s all President Joe Biden’s fault.  As ABC News put it:

“Americans overwhelmingly support the White House's proposed ban on Russian oil, though they remain very critical of President Joe Biden's handling of the economy, in general, and inflation, in particular, according to a new ABC News/Ipsos poll.

Over the past several months, Americans' wallets have been hit by skyrocketing inflation, and now, Biden is feeling that crunch in his approval numbers. Seventy percent of Americans disapprove of his handling of inflation. 

So Who’s Really Behind Inflation

For my money, corporations and financial services entities are the real culprits  - they are simply better at PR and deflection than most retail politicians, even the honest ones.  Remember, they own most of them via contributions anyhow..  Just look at Congress or your own state legislature.  

Writer Rick Wartzman (and Fortune, yes them) did a very detailed and and damming job of both tracking the data and showing how the bad guys have learned to bury the truth from you and I. 

Their recent article at Capital & Main peels back the obfuscation, and should be mandatory reading to counter all the corporate media BS:

“Several things stand out about what’s different since 1960: At five of the six companies, far less of each dollar goes to employees. At five of the six, more goes to shareholders — sometimes much more. That is mainly the result of stock repurchases, which companies often make in a bid to pump up the share price. Buybacks were largely illegal until 1982.

“That’s the main dynamic — the shift from worker to shareholder,” says Anna Stansbury, a professor at the MIT Sloan School of Management, who also reviewed the data.

Also at five of the six, less is going to taxes, a reflection of a markedly lower U.S. corporate tax rate — 21% vs. 52% in 1960 — and, very likely, more tax avoidance by corporations.

At all six of the companies, the “other expenses” category — a hodgepodge of items, including one-time charges — increased. Some of this is because of changes in reporting. For instance, United States Steel in 1960 specified how much went to suppliers. But it did not break out that number in 2019, and so those expenses got lumped into the “other” bucket.

Yet Stansbury suspects that something else could also be going on here: the steady growth of outsourcing, including the use of temp workers and contractors. “One factor may be the fissuring of work,” she says.” 

For those who don’t want to read all the words, graphics in the article prove the case beyond a reasonable doubt.  They run the gamut of most major financial and industrial companies. 

Oil and Reality

Since everyone is blaming Biden for the huge increases in gas, let’s use our new lens to see who’s actually manipulating the markets.  Our example is the State of New Mexico, and again thanks to Capital & Main for good storytelling.

“Our weak president threatens both America’s honor and freedom itself by pandering to dictators, limp Europeans and climate hoaxers in his drive to destroy the oil and gas industry with high gas prices. He and other politicians need to get out of the way of American oil and gas companies so they can get to work and drill, drill, drill us to energy independence.

At least, that’s what some politicians and lobbying groups are saying. But numbers more complex than the gas station bottom line tell a decidedly different story, one corroborated by economists both in New Mexico and farther afield — and by oil and gas producers themselves.

Producers have thousands of unused federal drilling permits — 1,040 in New Mexico alone. There are so many that President Joe Biden has threatened fines for not using them. Drilling rig counts haven’t followed increases in prices. Oilfield jobs in New Mexico are still down more than 20% since the COVID-19-triggered market collapse in March 2020. And perhaps most telling, in a survey of oil and gas producers conducted by the Dallas Federal Reserve Bank a month after the start of the Russian-Ukrainian war, the majority of producers said they had no plans to dramatically increase production in the next year.

Oil and gas demand shot up in recent months for myriad reasons: Countries around the world have left COVID-19 lockdowns; those people are buying more stuff; companies have begun hiring as lockdowns end; OPEC hasn’t increased production as expected; and, yes, Russia started an unprovoked war in Ukraine, triggering widespread

boycotts of Russian fuels and roiling international markets.” 

Don’t kid yourself, the politicians know this, whatever horsepucky they are feeding the public: 

“That brings up New Mexico’s perennial oil and gas problem — an over reliance on an unstable resource. The industry generates more than a third of state revenues, prompting a legislative feeding frenzy at the start of the year that hasn’t yet fully resolved.

“The reason they were able to have that session and the outcome that they did was because of the oil and gas revenues. There’s no doubt about that,” Chermak says.

“You know, when prices are good — woohoo! And then they go down, and everybody is kind of wringing their hands.” Before turning to economics and joining the faculty at UNM, Chermak worked as an oil and gas geologist in the 1980s, so she has kept her eyes on the industry for four decades. “It doesn’t seem like we ever learn,” she says. “It’s not like there’s the potential — I don’t think at this point in time — for other industries to take over that revenue or tax burden.”

At the same time, ever-increasing climate concerns drive environmental groups to push for decreasing dependence on fossil fuels, both at home and overseas. Those concerns reach the upper levels of government.

On the same day that the Dallas Fed released its findings, a quintet of U.S. senators, including New Mexico’s Martin Heinrich, signed a letter to President Joe Biden asking him to seize the Russian invasion of Ukraine as an opportunity to double down on renewable energy investments and further reduce the country’s — and the world’s — reliance on oil and gas. 

The Takeaway

As you can see, “inflation” has a lot more to do with corporations, market manipulation,  and the rich ‘shareholders’ skimming more off the top than than anything about Joe Biden. 

Don’t be guided by the headlines -  check out the reality for yourself.

 

(Tony Butka is an Eastside community activist, who has served on a neighborhood council, has a background in government and is a contributor to CityWatch.)