Posted on 11/20/2021 9:46:41 PM PST by SeekAndFind
Prices have been going up in a number of segments of the economy in recent months, and, as Visual Capitalist's Nick Routley exposes below, the public is taking notice. One indicator of this is that search interest for the term “inflation” is higher than at any point in the past decade.
Recent data from the Bureau of Labor Statistics highlights rising costs across the board, and shows that specific sectors are experiencing rapid price increases this year.
Since 1996, the Federal Reserve has oriented its monetary policy around maintaining 2% inflation annually. For the most part, U.S. inflation over the past couple of decades has typically hovered within a percentage point or two of that target.
Right now, most price categories are exceeding that, some quite dramatically. Here’s how various categories of consumer spending have fared over the past 12 months:
Of these top-level categories, fuel and transportation have clearly been the hardest hit.
Drilling further into the data reveals more nuanced stories as well. Below, we zoom in on five areas of consumer spending that are particularly hard-hit, how much prices have increased over the past year, and why prices are rising so fast:
Consumers are reeling as prices at the gas pump are up more than a dollar per gallon over the previous year.
Simply put, rising demand and constrained global supply are resulting in higher prices. Even as prices have risen, U.S. oil production has seen a slow rebound from the pandemic, as American oil companies are wary of oversupplying the market.
Meanwhile, President Biden has identified inflation as a “top priority”, but there are limited tools at the government’s disposal to curb rising prices. For now, Biden has urged the Federal Trade Commission to examine what role energy companies are playing in rising gas prices.
Natural gas prices have risen for similar reasons as gasoline. Supply is slow to come back online, and oil and natural gas production in the Gulf of Mexico was adversely affected by Hurricane Ida in September.
Compared to the previous winter, households could see their heating bills jump as much as 54%. An estimated 60% of U.S. households heat their homes with fossil fuels, so rising prices will almost certainly have an effect on consumer spending during the holiday season.
The global semiconductor crunch is causing chaos in a number of industries, but the automotive industry is uniquely impacted. Modern vehicles can contain well over a thousand chips, so constrained supply has hobbled production of nearly a million vehicles in the U.S. alone. This chip shortage is having a knock-on effect on the used vehicle market, which jumped by 26% in a single year. The rental car sector is also up by nearly 40% over the same period.
Meat producers are facing a few headwinds, and the result is higher prices at the cash register for consumers. Transportation and fuel costs are factoring into rising prices. Constrained labor availability is also an issue for the industry, which was exacerbated by COVID-19 measures. As a top-level category, inflation is high, but in specific animal product categories, such as uncooked beef and bacon, inflation rates have reached double digits over the past 12 months.
This category is being influenced by a few factors. The spike in lumber prices along with other raw materials earlier in the year has had obvious impacts. Materials aside, actually shipping these cumbersome goods has been a challenge due to global supply chain issues such a port back-ups.
Rising prices inevitably impact the economy as consumers adjust their buying habits.
According to a recent survey, 88% of Americans say they are concerned about U.S. inflation. Here are the top five areas where consumers plan to cut back on their spending:
Many experts believe that U.S. inflation will decelerate going into 2022, though there’s no consensus on the matter.
Improved semiconductor supply and an easing of port congestion around the world could help slow inflation down if nothing goes seriously wrong. That said, if the last few years are any indication, unexpected events could shift the situation at any time.
For the near term, consumers will need to adjust to the sticker shock.
* * *
Where does this data come from?
Source: U.S. Bureau of Labor Statistics – Consumer Price Index (November 10, 2021)
Data Note: The Consumer Price Index (CPI) measures the change in prices paid by consumers for goods and services. The CPI reflects spending patterns for each of two population groups: all urban consumers and
urban wage earners and clerical workers, which represent about 93% of the total U.S. population. CPIs are based on prices of food, clothing, shelter, fuels, transportation, doctors’ and dentists’ services, drugs, and other goods and services that people buy for day-to-day living.
From energy independence to warnings of winter blackouts in less than a year. Brandon’s administration stomps all over the oil and gas industry then pretends the high prices developed spontaneously.
#FJB
I heard on the news, that we were sending shipments from our petroleum reserves to China. And of course importing shipments from Russia.
Brandon and handlers - Idiocracy - unless they are deliberately trying to destroy the USA — which I suspect they are.
Yes, as Trump has said, “All they had to do was leave things alone and we’d be fine!” And they are hell bent on doing the opposite, day after day.
“...they are deliberately trying to destroy the USA ...”
Nothing ELSE explains their agenda!
We went from cheap and plentiful to expensive and scarce - all from one consolidated act of treason.
A builder friend said something to me the other day that is shocking. Here it is:
“There is no resistance to the price of building materials and labor from my vantage. The price of just PVC pipe has doubled in the last two months. I had two calls to build houses by Wednesday of this week and I turned them down. I am tired of having to spend $300,000 to build a house that won’t appraise for $240,000 even at today’s prices and then having the buyer blame me.”
You can no no longer build a house for what it will appraise for even in the inflated market of today. Not in our area anyway and that is with a near 50% increase in prices for existing houses in just the last few months. I also consistently see price reductions on Zillow for our area. They aren’t getting traffic. They shouldn’t, not from thinking people.
I asked for bids to install rough and top-out plumbing for an addition consisting of a bathroom with two sinks, a toilet, hot water heater, tub and shower. No fixtures. Probably not more than 3 days work. $8,000. I said no. The plumber is into one local 6,000 sf house and has not yet finished top-out for $80,000. Just for plumbing!
Wages aren’t going up to meet this kind of cost, shouldn’t and probably won’t. People who have “excess” profits from the stock market that are burning holes in their pockets may want to think about holding onto them instead of blowing it on inflated real estate.
This is insane. I have not seen anything like it in my seven decades.
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