Five years of price hikes show the scope of inflation’s surge

Inflation seems to be the economic word of the day. Bringing back the bad memories of the 1970s, inflation has reached a three-decade high. The past two years’ “emergency” spending packages, bond buy-backs, and printed money are repeating the worst mistakes of the Carter era. The June Consumer Price Index numbers, released today, show prices rose 0.9 percent, higher than the 0.5 percent economists had predicted. The 0.6 percent monthly increase in May followed an even larger 0.8 percent jump in April. The scope of the current surge can be understood best by looking back to prices of various goods over the past five years.

First is the cost of construction. The American economy nearly fell into recession during the final year of the Obama administration, and housing is currently red hot. Still, a sheet of lumber is a sheet of lumber. Recent prices show the extent of the increase. In May 2016, lumber futures reached a high of $328. In May of this year, it reached a high of $1,670. While lumber futures have fallen significantly since then, as production and supply chains begin to catch up, they’re still more than double the 2016 value.

Lumber is a crucial element of the overall economy, but it often does not affect most Americans’ day-to-day lives. Transportation does, however. The cost of operating an automobile has grown dramatically in the past five years. In the middle of May 2016, the average price of gasoline was $2.22 per gallon. By the end of May of this year, it was over $3.00 per gallon; today, it’s up over a dime more. The nearly 35 percent surge in gas over the past five years increases not only the cost of bringing kids to sports practice, commuting to work, or going to family outings, but also the price of nearly every consumable product.

Gasoline is only one part of the average cost of transportation for the average American family. Even though 2016 set a record for the highest price of used cars, at $19,189, it has been eclipsed by 2021 levels. By May of this year, the values shot up to a new height of $26,500. This is a 38 percent rise, and marks the second-highest increase on record. The previous high point was set in 1975, during the intense pain of stagflation. With the summer months upon us, along with a massive wave of summer travel, these prices will only continue to balloon.

For the average American family, transportation, housing and food prices are the three largest impacts to their household budgets. Food prices are up 5 percent, the most significant increase in 13 years. Meanwhile, in May 2016, food prices fell by 0.2 percent.

Even prices that traditionally tend to decline or stay steady, such as technology, are on the increase. A combination of supply issues and tariffs led to the largest increase in computer prices in over a decade, at 2.5 percent. Specific brands raised their prices even more in recent months — HP PCs are up by 8 percent, and printers cost 20 percent more. Meanwhile, in 2016, electronics prices fell by more than 5 percent. The United States is experiencing a bizarre period where traditionally-inexpensive goods are rising in prices while raw materials increase wider prices across the board.

The recent price surges forecast that the worst is yet to come, should federal policy continue on its current path. Add the post-pandemic loose fiscal policy, plus the injection of trillions of new dollars from the Federal Reserve to the unemployment bonus scheme crushing crucial supply chains, and we have all of the makings of a medium- to long-term crisis.

Many economists are blaring a contradictory set of projections for the next year. Turn on CNBC or read the business pages of most publications, and there are predictions of both a hot economy and tame inflation. Heck, there are dozens of think-pieces downplaying the potential effects of inflation. These two cannot exist simultaneously. Either the pent-up demand of the pandemic will lead to hot economic growth (and further increased inflation) or the economy will slump because of federal policy, and bring down prices with it. For the time being, we will likely see the former, and then the latter, funded by trillions of dollars in borrowing, printing and providing “free” cash in a sugar rush of economic activity.

The president has already gambled that his economic policies will allow the nation to recover from COVID-19 and avoid inflation. It’s not a gamble that I would take, but it’s one that we’re all tied to. Joe Biden is betting the house — and in a sense, he’s betting yours.

Kristin Tate is a libertarian writer and an analyst for Young Americans for Liberty. She is an author whose latest book is “How Do I Tax Thee? A Field Guide to the Great American Rip-Off.” Follow her on Twitter @KristinBTate.