Tag: inflation

The Status Quo Is a Comic-Book Parody

The sharpest critique of the status quo–and therefore the one most likely to spark spittle-flecked freakouts–is that stripped of self-important spin, it’s a comic-book parody of a functional state of affairs. The key to a solid parody is the most absurd exaggerations are taken with the utmost seriousness, as if the participants are completely unaware of the laughable nature of the caricatures they’re playing.

So let’s conduct a thought experiment: boil off all the grandiose self-importance (“we’re serious people discussing serious things,” blah-blah-blah) and hyper-stylized spin (“AI will make everything free, or end the world as we know it!”), and then try to parody what’s left.

You can’t. Everything in the status quo is already a self-parody and therefore impervious to being parodied. Whatever we come up with as a parody is only a pale shadow of what’s passed off as “serious people doing serious things.”

Consider The Imperial Project ™ War Room for playing their live-action game War of Choice ™. This is the pinnacle of “serious people discussing serious things”–what’s our next War of Choice ™?

It’s not ideal, but it’s the only war we got.

War generates inflation which creates an illusory “growth” that impoverishes the bottom 90% as life becomes unaffordable, a tragicomic parody of prosperity: as long as this parody of prosperity enriches Wall Street, the status quo cheers.

Keep reading

Fed’s Goolsbee calls inflation report ‘borderline disturbing’ as central bank weighs more hikes

Chicago Federal Reserve President Austan Goolsbee called the latest inflation data “borderline disturbing.”

“It’s another distressing report — borderline disturbing,” Goolsbee said in an interview with “PBS NewsHour” on Tuesday.

“We’ve got a real inflation issue on our hands that has been developing,” Goolsbee said. “We’re going to have to deal with that.”

The consumer price index rose 0.4% on a seasonally adjusted basis in October, according to the Bureau of Labor Statistics’ Tuesday morning release. That was higher than economists had predicted, and the third straight month of outsized price increases.

Goolsbee said he had not seen drivers of prices like tariffs fade over time like he had hoped. He also said continuously high inflation on services concerned him.

And the Chicago Fed chief said lofty prices are a top issue for many people he meets.

“It’s on everyone’s mind,” Goolsbee said. “It’s on business mind. It’s on nonprofits’ minds. It’s on ordinary consumers’ mind.”

Keep reading

The Inflation Hot Potato

They began, of course, with one of the most chaotic and intense years in recent American history. After a global pandemic brought almost all aspects of life to a halt, cities erupted in nationwide riots for much of the summer, and a seemingly endless stream of scandals and stunts like the Hunter Biden laptop drove the politically-active public to exhaustion; after all that, Joe Biden won the presidency.

Biden—the old-fashioned, centrist, familiar vice president from the Obama years—was supposed to represent a repudiation of the chaos of the Trump years, and of 2020 especially. The “adults were back in charge,” and politics could finally get boring again. Or so many thought.

Instead, the Biden years saw the government’s heavy-handed pandemic response drag on, the outbreak of war in Ukraine and, later, Gaza, and the consequences of the bipartisan economic response to the covid pandemic slam into the already-exhausted country in the form of a forty-year-high rate of price inflation.

The high prices especially drove many voters to abandon the Democrats in the 2022 midterms—although the Supreme Court’s overturning of Roe v. Wade earlier that year drove high Democratic turnout, which greatly minimized the expected “Red Wave.” Still, in 2024, voters seemed to snap all the way back in the other direction and handed Trump and the Republican Party the White House and both houses of Congress. And now, only two years later, Trump’s approval rating is at a historic low, and not only Democrats but even “democratic socialists” are enjoying all the political momentum, as we saw in Tuesday’s elections.

It can be tempting to chalk these dramatic political swings up to any one of the many stories that dominate the news cycle at the moment. Or, on the other side, to some seemingly inexplicable global forces of chaos that seem to be driving all aspects of public life these last few years.

But, in truth, there’s a very clear explanation for the political whiplash we’ve been experiencing in these last few elections: inflation.

Now, too often, any discussion of inflation becomes hyper-focused on one unusually high driver of last month’s CPI report or a slightly better-than-expected month-over-month reading in the core PCE.

But that is not how most people have experienced and are experiencing inflation.

To better understand how inflation has changed our politics, we have to zoom out.

As we cover here a lot, inflation has been a ubiquitous and escalating problem in this country for a long time. Prices naturally fall as economies grow. It’s only because the political class was able to take control of the monetary and banking system over the last fifty to a hundred years that the sort of permanent price inflation we’re supposed to consider normal is even possible.

In other words, inflation isn’t a new problem. But, back in 2019, it was mostly a background issue. Prices were rising, but slowly. And the entire field of “respectable,” establishment-friendly economists were telling everyone that the 2 percent inflation rate was optimal. Those obsessed with politics were focused on non-economic stories like the Trump impeachment, while the politically-disinterested majority were focused on their own lives.

But then covid started to spread, and state and local governments across the US began locking down the country with the full support of the federal government. And a primary aspect of that federal support came from the Federal Reserve.

Keep reading

Who is Making Billions from the Iran War?

At a campaign rally over the weekend, President Trump dismissed Americans’ concerns over high oil and gas prices, claiming that it’s a small price to pay for the hundreds of billions of dollars “we” are making from these higher prices.

“We’re making a fortune,” he said. “Hundreds of billions of dollars. Trillions of dollars.”

People are paying a little bit more for gas, he explained, but it doesn’t matter because “we” are making so much money.

The question is, “Who is ‘we’?” We know it is not the American people. They are seeing wage stagnation, inflation, and more pain at the pump. An Economist/YouGov poll earlier this month found that inflation and prices are the top concern among Americans by a wide margin. And in second place were jobs and the economy.

The same poll asked Americans how they rate the state of the US economy and in first place – again by a long shot – was “poor.”

If “we” as in the American people were making hundreds of billions of dollars from the war, you would think these would not be their top two concerns.

But we understand what the President meant by “we.” He meant that part of the “private” sector directly or indirectly in bed with the government war machine. From oil companies to weapons manufacturers and everything in between, war and conflict drive up profits in well-connected corporations at the expense of the rest of us.

That is why we are in a constant state of war. Twenty years in Afghanistan and a similar length in Iraq. Endless bombing in places like Somalia. A twelve-year (and counting) proxy war with Russia in Ukraine. Military bases and covert operations across the globe.

And if we find that the largest military budget in the world does not deliver enough actual weapons to win a war? Well, that’s all good too: just double military spending and accuse anyone who objects of not being patriotic!

“Private” companies with enormous political power – many of them revolving doors between government and business – “make so much money” on war, as Trump would say. Whether these wars produce US wins, loses, or stalemates, these corporations in bed with government always win. The money-printing machine makes sure the money cycles into government-favored companies, while campaign contributions are made to the politicians who support the wars.

And if you don’t support the wars? You get the Thomas Massie treatment.

Keep reading

“Never-Ending” Cruise Hits Dead End: Passengers Stranded In Cambodia As Fuel Bill Sinks Voyage

Villa Vie Residences suspended operations of its 650-passenger residential cruise ship on Tuesday, citing “extraordinary“ fuel costs that have placed its business model under unsustainable financial pressure.

The Florida-based operator is evaluating restructuring and recapitalization options as it coordinates the disembarkation of passengers from its Odyssey ship, moored off Cambodia.

Fuel costs have soared more than 300% since the Gulf conflict erupted in late February.

Very low sulfur fuel oil (VLSFO), a marine fuel used to power large ships, rose to $966 a metric ton in Singapore earlier today. At the onset of the conflict, the maritime fuel jumped to nearly $1,200 a metric ton, up from prewar levels of around $500.

Keep reading

The War in Iran Comes Home to ‘Trump Country’

“It’s not tariffs… it’s the war, it’s gas prices, it’s diesel.”

In leaked audio obtained by Axios, Ken Paxton, the Republican nominee for senate in Texas, spoke candidly about what he believes are the biggest issues hurting his campaign. The Iran war, which has dragged on for almost eight months now, has put Texans – and the rest of the nation – in an economic bind, one which President Donald Trump had promised to avoid.

Crude oil prices have once again risen above $100 a barrel. The national average for gasoline is hovering above $4. With Republicans nationwide being burdened by the stench of incumbency – regardless of whether or not the individual candidate is currently in office – a return-to-power seems all but imminent for the Democrats in the House of Representatives, and maybe even the Senate as well.

This is even true in “Trump Country.”

The war itself is a topic which evokes hardline opinions on both sides. Fierce debates have been had in elite circles over the wisdom of launching the military campaign against Iran, the strategic blunders of the Trump administration, and the way in which the war has been conducted. What has been a bipartisan concern, however, is the rise in fuel prices brought upon by the war.

People en masse may not know the technical details of the raging conflict in the Strait of Hormuz, or even where to find it on a map. What they do know is that when they turn on social media or turn on the TV, the campaign ads they see coming from Democrats consistently associate the skyrocketing fuel prices with the war in Iran – attaching the Republican opponent to the White House’s unpopular war.

Meanwhile, the rebuttal from Trump isn’t an explicit denial of these accusations. Rather, he has embraced them.

“It’s a small price to pay,” Trump said at a rally in Alaska on October 14, “for stopping [Iran] from having a nuclear weapon.”

Trump’s fanbase, collectively referred to as “MAGA,” have been known for their unwavering loyalty to the president. Trump famously joked in a 2015 stump speech “I could stand in the middle of Fifth Avenue and shoot somebody, and I wouldn’t lose any voters.” The spirit of this has been generally correct. On most issues, Trump’s supporters have stuck with him regardless of his many contradictions – be it on the Epstein files, government spending, or the merits of various DC swamp creatures.

There has been a crackup, though. Trump’s swagger – his inability to disgust his diehard fans even if he tried – seems to be weakening.

The Iran war, while historically unpopular, isn’t the sole reason for this. Neither is his baseline hawkishness, which contradicts his dovish campaign rhetoric. The majority of Republicans were happy to support Trump’s January 2026 operation in Venezuela, and most also approved of the bombing of various small boats off the coast of Central and South America. But this war had a different effect on Trump’s coalition than the one in Iran.

For one, the Venezuela operation was relatively limited in its scale, and the same can be said for the boat strikes. The fighting in Caracas lasted mere hours and resulted in no American casualties. President Delcy Rodríguez’s regime has remained in power, and blowback – at least in terms of significant negative ramifications – has not been felt in the U.S. to this point (that doesn’t mean it won’t appear in the future, to be clear).

Most importantly, the economic impact of the operation wasn’t notable. There weren’t any immediate concerns about twenty percent of the world’s energy supply being stuck behind a missile-riddled waterway, for example.

The situation has been exactly the reverse in the Middle East.

Keep reading

Gen Z Is Broke and Fed Up With Politics

At Thanksgiving last year, a great-aunt tried to offer Kayla Cornett a reassuring example: Her older cousin had worked hard, saved and bought a house. Cornett, 24, could do the same, she said — if she tried just a little bit harder.

What stayed with her long after the turkey was cleared was the implication that her current efforts just weren’t enough. She was trying to keep up with rent and the ordinary expenses of adulthood, and it was a struggle. She recently started carrying a credit-card balance for the first time, she says, after even modest costs began piling up. Filling her gas tank was $40. “I can not eat, or I can have credit card debt,” she remembers thinking when older relatives questioned her balance.

Cornett and her partner have stayed in their Raleigh apartment even as the complex has grown less safe and cars have been broken into. They had moved in 2023 and were reluctant to do so again; other places now cost $200 or $300 more per month. Leaving would mean trading one worry for another bill they can’t afford.

“The little things are accruing in a way that feels insurmountable to me,” Cornett says.

The affordability crisis is a struggle felt by everyone in the country, but it’s hitting Cornett’s generation particularly hard as they emerge into adulthood with high inflation, little savings, a wobbly job market and a lifetime of dysfunctional politics. Transunion, a consumer credit reporting agency, found in a 2024 study that 22- to 24-year-olds in Gen Z had higher average credit-card balances, higher average auto-loan balances and higher average personal-loan balances than millennials of the same age a decade earlier, even when adjusted for inflation. Gen Z borrowers also had higher delinquency rates than their millennial counterparts.

This gap — between the promise that hard work will bring stability and the costs young adults say they can’t get ahead of — is key to understanding the politics of Gen Z, a voter group that helped President Donald Trump win in 2024, but whose longtime loyalties have yet to be won by either party.

After Trump’s victory, much was made of a vibe shift in American politics. The manosphere was ascendant and tradwives were everywhere. For a brief moment, it seemed like conservatives had captured the attention of American youth. Perhaps. Or perhaps Trump pulled in young voters because of his promises to rein in high prices, and since he failed to do so — amid his tariffs and his war with Iran — young people are preparing to reject the GOP in droves in the midterms.

Gen Z’s political behavior is often viewed through the lens of cultural issues or internet trends. But based on a dozen interviews with Gen Zers from across the country, those explanations obscure a more fundamental force: They belong to a generation coming of age with less financial security and with a growing sense that the American economy doesn’t deliver, at least not for them. A crushing debt load is the most tangible proof.

“The first time I voted was the 2024 presidential election,” says Anna Yi, a 21-year-old Democrat studying at the University of North Carolina-Chapel Hill. “I remember being a little bit naive and being like, ‘There’s going to be a lot of change. There’s going to be a lot of sweeping social reform and whatnot.’ Now it’s: Who’s going to get me a job? Who’s going to let me afford my own place before I turn 40?”

Keep reading

Inflation Is Rising on Top of Inflation

The September Consumer Price Index has come in at 3.7%, up from 3.4% in August, with prices rising another 0.6% in a single month. The Bureau of Labor Statistics reported the largest monthly increase in five months, driven primarily by energy. Gasoline jumped 9.1% in September alone, accounting for more than half of the monthly increase, while the overall energy index rose 5.2%. The politicians and economists continue talking about inflation as though these monthly reports represent the entire cost-of-living problem. They seem incapable of understanding that Americans are paying these increases ON TOP of the massive inflation that has already accumulated since 2020.

The breakdown of September inflation illustrates just how unevenly these increases are hitting consumers. Energy prices are now 20.4% higher than a year ago, gasoline has surged 34.2%, and fuel oil has exploded 74.2%. Airline fares have risen 22.4%, while education is up 3.8% and shelter another 3.2%. These are not insignificant expenses that households can simply eliminate. People must drive to work, heat their homes, pay their mortgages or rent, and purchase the necessities of life. The government can exclude food and energy to produce its preferred core inflation figure of 2.6%, but nobody gets to exclude those expenses from their household budget.

The cost of living was already elevated before this latest surge. The inflation accumulated during the pandemic never disappeared. Prices did not return to 2020 levels simply because the annual inflation rate temporarily declined. When a household is already paying roughly 30% more for many everyday expenses than it did before the pandemic, another 3.7% increase means the purchasing power of its income deteriorates further. This is why the public becomes increasingly angry when politicians announce that inflation is improving. They are discussing the RATE of increase while the public is struggling with the actual PRICE of everything.

Energy is now feeding another wave of inflation throughout the economy. The disruption caused by the conflict involving Iran has pushed fuel costs higher, and that expense does not remain confined to the gasoline pump. Diesel moves the trucks that deliver food, supplies the agricultural industry, and supports construction and manufacturing. When transportation becomes more expensive, those costs eventually work their way into everything from groceries to building materials. The Fed cannot manufacture oil, reopen shipping routes, or resolve geopolitical conflicts by raising interest rates another 25 basis points.

Meanwhile, the labor market is showing signs of weakness. September payroll growth was only 29,000, and unemployment stood at 4.2%. The economy is producing insufficient employment growth to give workers confidence that they can simply demand higher wages to offset these rising costs. This is the squeeze that conventional economic theory continually fails to address. Consumers face higher prices while employment conditions weaken, and raising interest rates to combat inflation can make financing even more expensive for businesses already struggling with energy and operating costs.

Washington is also the largest borrower in the economy, yet nobody seriously expects Congress to stop spending. The federal government continues accumulating debt, paying more to service that debt, and competing with the private sector for capital. The Federal Reserve can influence short-term rates, but it cannot control government deficits, international capital flows, energy supplies, or the willingness of businesses and consumers to spend. The academics continue pretending that inflation is something they can fine-tune through monetary policy while ignoring the fiscal and geopolitical forces driving the economy.

The September report is particularly troubling because inflation is accelerating at a time when the Fed has already reversed its previous easing policy. The bond market is watching these numbers because investors must consider whether the yield on government debt adequately compensates them for inflation. Washington wants lower borrowing costs, but global capital has no obligation to finance the government at artificially low rates simply because politicians have accumulated debts they cannot afford to service.

Keep reading

Americans Are Spending More Because Everything Costs More

Economists keep pointing to consumer spending as proof that the American economy remains strong. Americans spent 0.9% more in August, and naturally this is being celebrated as the resilient American consumer. But real disposable income did not increase AT ALL, while the personal savings rate fell to just 4.1%. Americans are spending more while their inflation-adjusted income is going nowhere and savings are being depleted to maintain their standard of living.

The cost-of-living crisis is showing up in the numbers. Consumer spending can rise during inflation simply because everything costs more. If your grocery bill rises from $150 to $200, you increased consumer spending by 33%, but you did not become wealthier or eat 33% more food. You simply handed over more dollars for the same necessities.

Personal consumption expenditures increased by $190.8 billion in August while personal income increased only $66.6 billion. Real consumer spending rose 0.6%, but real disposable income was flat. You can maintain that imbalance temporarily by reducing savings or borrowing, but you cannot maintain it forever.

This is what Washington never understands about inflation. They tell people inflation has fallen because the RATE of increase is lower than it was at the peak. That does not mean prices went back down. Consumer prices are roughly 30% higher than at the end of 2019. Something that cost $100 then costs roughly $130 today. Lower inflation merely means prices are rising more slowly from an already elevated level.

This is why consumer confidence can collapse while spending remains strong. The Conference Board’s Consumer Confidence Index plunged to 81.9 in September, its lowest reading since 2014. The University of Michigan’s sentiment index fell to 48.1 and is now 15% below January. People are continuing to spend because they must continue living, but they are increasingly worried about what comes next.

The University of Michigan reports that consumers’ expectations for inflation over the next year climbed to 4.6% in September, up from 3.4% in February. Consumers’ assessments of both their current and expected personal finances also deteriorated. The paycheck may still be coming in, but it simply does not stretch as far as it once did. Americans feel the conditions of the economy daily.

Even if inflation fell to 2% tomorrow, today’s elevated price level would remain. Prices would simply continue increasing from that higher base. This is how inflation quietly destroys the middle class. Savings decline, debt rises, homeownership becomes harder, young people delay families, and retirees discover that their savings purchase far less than expected.

The American consumer has kept this economy moving, but there is a limit to how long households can spend faster than their real incomes grow. You cannot raid savings forever, increase credit-card balances forever, or finance your standard of living indefinitely.

Keep reading

The Inflationary Backlog 

Everyone looks at the headline manufacturing number and moves on, but buried inside the September ISM report is something far more important. The Prices Index surged 6.8 points to 77.9 while the Backlog of Orders Index jumped 4.6 points to 56.4. When backlogs move above 50, unfilled orders expand, meaning manufacturers are receiving work faster than they can efficiently complete it. When that happens at the same time prices are surging, the supply chain is telling us there is still pressure in the pipeline.

ISM reported that 43.5% of respondents were paying higher prices while only 2.7% reported lower prices, so this is not merely a story about stronger orders. Costs are rising sharply while unfinished work accumulates.

That combination can become inflationary because shortages change behavior. Companies begin ordering earlier because they fear they will not receive what they need later. Buyers become less concerned about negotiating the lowest price and more concerned about securing supply. Suppliers gain pricing power because customers cannot simply walk away when everybody else is waiting for the same materials. We saw precisely this during COVID when shortages encouraged businesses to order more inventory as protection against future shortages, making the bottlenecks even worse.

This is why the backlog matters more than most people realize. These are orders already sitting in the pipeline waiting to be completed, meaning they represent future production even if new demand begins to weaken. Consumer confidence can decline and the labor market can soften while manufacturers simultaneously face rising costs and unfinished orders. That is how you end up with economic weakness and inflation at the same time.

The Federal Reserve cannot fix this with another 25-basis-point move. Higher interest rates do not produce another barrel of oil, manufacture copper, eliminate tariffs, reopen shipping lanes, produce semiconductors, or build another factory. The Fed can suppress demand, but it cannot manufacture supply, and higher borrowing costs can actually make expanding productive capacity more expensive.

This is precisely why inflation can come in waves. CPI tells us what consumers have already paid, while manufacturing data can reveal pressure moving through the system before those costs reach the final customer. Manufacturers can absorb higher costs for a while by sacrificing margins, but eventually somebody pays. If the Prices Index remains elevated and backlogs continue expanding, businesses will increasingly attempt to pass those costs down the chain.

The September numbers should therefore be watched carefully. One month does not establish a trend, and backlogs could fall again, but a Prices Index of 77.9 alongside a Backlog of Orders Index at 56.4 is not a signal that inflationary pressure has simply disappeared. While Wall Street obsesses over every sentence from the Federal Reserve, the people actually producing goods are telling us something much more useful: their costs are rising while the work waiting to be completed is piling up.

Keep reading