Is Inflation Really Too High for Most Americans?

The question of whether inflation is too high has been a contentious topic, especially among younger Americans who may not have experienced periods of higher inflation. Let's delve into the historical context and current state of inflation in the United States.

The Historical Context

From my time spent working as a bartender at a local bar, I can attest to the relative stability of prices over the years. I heard stories from older patrons about the inflation spike in the 1970s, but my personal experience lies with the relatively stable inflation rates of the 1990s and 2000s, which hovered around 3-4%. These were comfortable times, and people managed well during this period.

It was only after the Great Recession that monetary policies began to drive inflation down, bringing it closer to zero. This led to the low inflation rates of a decade before the start of the COVID pandemic. Today, we're seeing inflation levels around 3.2-3.4%, which is right in the middle of the historical average for the past 64 years.

Impact on Daily Life

As a bartender, I haven't noticed any significant impact on sales due to inflation. The cost of a Bud Light or a mixed drink hasn't changed drastically, and tips from customers remain consistent. This suggests that for most Americans, even at 3.2%, inflation isn't as problematic as many tend to believe.

For those who complain about inflation, it's often easy to spot when they truly mean it by their behavior. Inflation, at 3.2%, is not as “really too high” for most Americans when compared to the 16-18% inflation rate experienced during the Reagan administration.

American Public Attention Span and Misconceptions

It’s important to consider the average span of attention among the American public, which hovers around just a couple of days. This means that people often forget the historical context of inflation. They may not remember the 70s and 80s, which saw much higher inflation rates.

In addition, many Americans do not read or seek to educate themselves on economic matters. This lack of knowledge often leads to misconceptions, such as the false notion that interest rates could remain at zero indefinitely. In reality, such an idea was just part of a short-term policy response to the financial crisis.

Current Economic Situation and Average Wages

The current inflation rate of 3.4% is still within a tolerable range for most Americans. According to the Economic Policy Institute, average wages have surpassed inflation for 12 straight months, indicating that people are earning enough to cover their expenses.

However, it’s important to note that the economic situation can be more complex. When we account for factors such as food, gas, and electricity, the costs can add up:

40-50% on food 25% on gas 30% on electric bills

These figures can make a significant impact on household budgets, even with the inflation rate being lower than it was in the 1970s.

Inflation and Political Context

The discussion about inflation often gets clouded by political narratives. For instance, it’s frustrating when politicians claim that the economy is better now, especially during President Biden’s tenure. They point to the end of the recession as evidence of economic improvement, but they omit mentioning that the Biden administration didn't control the economy before the recession.

Regarding the definition of a recession, there has been some creative accounting. Some metrics were stopped counting inflation increases during Biden’s presidency, effectively removing certain sectors (like food and gas) from the inflation calculation. This manipulation doesn't reflect a true economic reality.

The gaslighting that occurs when politicians claim that the economy is much better now, despite the challenges faced by many Americans, is particularly infuriating. It’s a form of rhetoric that misleads the public and dilutes the real issues at hand.

Understanding the current economic situation requires a closer look at inflation rates, salaries, and overall living costs. While 3.2% inflation is not a cause for alarm, it's essential to consider the broader economic context and the real experiences of everyday Americans.