President Joe Biden might as well change the nation’s name to the United States of Inflation since the latest consumer price index (CPI) sizzled in November. Once again, everything became more expensive over the last month, buoyed by a historic monetary expansion, a global supply chain crisis, and simultaneous demand worldwide. But low- and middle-income Americans struggling to make ends meet should not worry because CNBC host Jim Cramer believes this is the best economy he has ever seen So, let’s dive into the numbers and see how consumers’ pockets are getting fleeced by this lethal tax we call inflation.
Bidenomics 101: Inflation Does Not Discriminate
The U.S. annual inflation rate surged to 6.8% in November, up from 6.2% in October. This was slightly higher than the median estimate of 6.7%. The CPI advanced 0.8% on a month-over-month basis, which was also more than the 0.7% the market had penciled in ahead of the much-anticipated report.
The core inflation rate, which removes the volatile food and energy sectors, climbed 4.9% in November, matching economists' projections. The core CPI rose 0.5% from the previous month.
Overall, inflation has not been this high in 39 years. But where are the price pressures being felt? The Keynesian coquettish mistress does not discriminate as the cost of living was felt across the board in every sector of the economy. Well, except for potatoes, which dipped 0.2%.
Here is a breakdown of price inflation compared to the same time a year ago:
Food: +6.1%
Energy: +33.3%
New Vehicles: +11.1%
Used Automobiles and Trucks: +31.4%
Apparel: +5%
Shelter: +3.4%
Within the food expenditure category, consumers spent 12.8% more on meat, poultry, fish, and eggs. Dairy climbed 1.6%, while fruits and vegetables advanced by 4%. It is going to cost more to be healthy since apples soared 7.4%, bananas jumped 3.7%, oranges edged up 0.9%, and the "other fresh fruits" spiked 7.7%.
On the energy front, fuel oil skyrocketed 59.3%, motor fuel increased 58%, and electricity picked up 6.5%. Tenants desiring the luxury of a roof over their heads paid 3.9% more for rent. If you think you can avoid paying more for your heating bill by adding layers, you can think again. In November, men's apparel was 7.6% higher, and women's apparel was 4.2% more.
From dental services to postage to funeral expenses to checking accounts, every good and service you could think of in the marketplace was costlier last month. And there are no signs this is slowing down.
How the Markets Responded
Unlike the emergence of the Omicron variant, the highest inflation reading since 1982 didn’t spook the financial markets. At the opening bell on December 10, the Dow Jones Industrial Average rose about 200 points, the Nasdaq Composite Index rallied more than 100 points, and the S&P 500 tacked on 0.7%. The leading benchmark indexes are poised for a winning week.
The metals market, a conventional refuge from rampant price inflation, was not ebullient: January gold futures added $8.50 to $1,785 an ounce, and February silver futures tumbled below $22 per ounce. But cryptocurrencies, which financial experts debate is the new inflation hedge, rallied, with Bitcoin surging more than $2,000 to nearly $50,000. Ethereum also climbed 2.25% to close to $4,200.
The U.S. Treasury market was mostly drowning in a sea of red ink, with the benchmark 10-year bond down 0.015% to 1.472%. The one-year bill edged up 0.01% to 0.274%, while the 30-year bond dropped 0.02% to 1.846%.
What Next?
The Federal Reserve and the White House have abandoned the term "transitory" when describing inflation. They do insist, however, that inflation pressures will ease sometime in the second half of 2022 just in time for the mid-term elections. But this level of optimism might not convince the public, especially when President Biden's approval rating is stuck at around 41%, including 56% who disapprove of his economic record. Will the near four-decade-high inflation be enough for the Washington establishment to hit the pause button on massive spending, borrowing, and printing? Bidenomics and its offspring, the Build Back Better agenda, require the government to spend, borrow, and print trillions of dollars without a care in the world. It is too bad the American people will suffer for the Biden administration’s big-government paternalism and recklessness.
~ Read more from Andrew Moran.
