White House on Inflation; It’s Only One Guy
White House spokesman Jay Carney today dismissed a statement from WalMart’s CEO that price-boosting inflation is advancing up from producers to consumers.
“In terms of one person’s prediction about inflation, I’ve don’t have a response to that,” he told reporters assembled for the daily press briefing.
But WalMart’s CEO, Bill Simon, is tracking the exact price of everything he sells – from avocados to zucchini, autoparts to zippers – and he’s got prices from farms and factories, middlemen and resellers, truckers and shippers. The company is “seeing cost increases starting to come through at a pretty rapid rate,” he told USA Today’s reporters on Wednesday.
Carney’s response to inflation risks a public backlash and already, Gallup’s March 27 poll numbers show that only 36 percent of its panel belief he has a clear plan for solving the country’s problem.
White House officials closely track gas prices, partly because they’re a brake on economic recovery, but also because they hit swing-voters in the pocket. “We watch these things very closely,” Carney told the press, adding that the President has already announced a national energy plan. That plan, revealed March 11 and again on March 28, calls for a series of energy-efficiency measures, but actually offers consumers few or no measures that would reduce gas prices.
Gasoline prices have doubled to roughly $3.60 since the President’s inauguration, partly because the recession had pushed prices unusually low, but also because of instability in the Middle East and because of tightened restrictions on U.S. production.
But food prices have also risen since 2007, partly because of the federal decision to pay farmers more when they grow corn for ethanol rather than for food. Price increases have been masked, so far, by many companies’ decision to quietly reduce the quantity of material in packages. Food-manufacturer are putting 13.5 ounces of food in cans that once held 16 ounces, but keeping the price level, for example. This stealth-inflation has prompted a series of consumer complaints, which have then prompted news articles and TV shows to explain the trend.
The chief driver of inflation these days is the administration-backed policy of “quantitive easing” by the Federal Treasury. Under this policy, the Treasury declares it has billions of dollars which it then uses to buy Treasury Bonds, this providing funds to continue U.S. deficit spending, at more than $1.5 trillion per year, or roughly 40 percent of government spending. The more dollars that exist, even if they are only virtual dollars, the less each dollar is worth, unless the slowly-growing economy can accelerate and produce more wealth.