So, the Economy’s Great Now, Right? Inflation Report Yields Mixed Results
“I just want to say a number: zero,” said President Joe Biden Wednesday. “Today, we received news that our economy had 0% inflation in the month of July — 0%.” He added, “While the price of some things went up last month, the price of other things went down by the same amount. The result? Zero inflation last month.”
That’s true as far as it goes. According to the July Consumer Price Index (CPI) report the Bureau of Labor Statistics released Wednesday morning, the price index “was unchanged in July on a seasonally adjusted basis,” which means prices for July were about where they were in June. As a result, the rate of price inflation over the past 12 months decreased to 8.5% in July from June’s 9.1%.
As you may have noticed, gasoline prices have fallen somewhat (7.7%, according to the CPI), and so have energy prices in general (4.6%). But food prices continued to rise (1.1%), and the prices of everything else have also crept upward (0.3%). Prices fell in a few individual categories, like transportation and used cars, but nowhere nearly as much as gas prices. Without the fall in gas prices to offset increasing prices elsewhere, America would have suffered another historic month of inflation.
Of course, gas prices remain at wallet-busting levels. If waiting for gas prices to decline feels like Noah after the flood, waiting for the waters to recede, you’re not alone. The unaffordability of filling up the tank, along with recession fears is contributing to reduced demand as families cut back on driving and other travel.
Yet some politicos found the inflation report cause for celebration. “U.S. inflation took a breather in July, thanks to the falling cost of food and gas [only half true], as consumer prices grew at a slower pace than in previous months,” CNN cheered. “Jobs up and inflation down. Wages up and gas prices down,” echoed Ron Klain, Biden’s chief of staff.
Released by the Bureau of Labor Statistics on August 5, the July jobs report Klain referenced did show unemployment drop even further to 3.5% as a whopping 528,000 jobs were added. But it also showed signs of economic distress, including an increase (408,000) in people taking a second, part-time job in addition to a full-time job, indicating they have difficulty making ends meet, and an increase (303,000) in people employed “part-time for economic reasons,” which means they would prefer to be working full time. As to wages, they still aren’t keeping pace with inflation.
But celebrating because prices stayed put after a year of historic inflation is like celebrating that an oppressive August afternoon, with a feels-like temperature of 105 degrees, stayed at a feels-like temperature of 105 degrees for another hour. Prolonging the pain is not a good thing.
Even a member of President Biden’s own Council of Economic Advisers could see Wednesday’s inflation report called for “no victory lap.” It’s not a high bar to clear the “at least it didn’t get any worse” standard. It’s telling that continued disasters are now the default expectation for the Biden administration, and playing to a draw is considered a win.
In Biden’s economy, we were told to enjoy $0.16 off our Independence Day cookout, or $0.02 off a gallon of gasoline, as a reprieve from the inflation he caused. And that was before Russia invaded Ukraine. Such paltry, fleeting reductions deserved all the credit of a mafia kingpin observing traffic laws. And exhortations to praise them were justly met with ridicule.
In all fairness, July’s inflation numbers could have been worse. Gasoline hasn’t hit $6 per gallon (nationwide, at least). The breathless inflation momentum has hit a temporary slowdown, and perhaps even a pause. Yet after months of spiking prices, prices did not drop; they just stayed put. Is a mixed result after a string of spectacularly bad results really cause for celebration? Perhaps it depends on your perspective. Time will tell whether July 2022 was a road bump in inflation’s upward trajectory, or whether the trend line has turned a corner.
For now, the impact on families is this: instead of inflation taking 9.1 cents out of every dollar they earned in the past year (as in June), inflation has only taken 8.5 cents out of every dollar they earned in the past year. Woo hoo! … or, something.
Joshua Arnold is a staff writer at The Washington Stand.