Wednesday | November 11th, 2021

It’s Wednesday, November 11th, and this is your Morning Wire. Listen to the full podcast:

1) Inflation Hits 30-Year High

The Topline: New data from the Labor Department shows inflation was even worse than expected last month, with prices on common consumer products rising at the fastest rate in over three decades. 

Quote Of The Day: “The concern about the rising inflation is paramount for the president…and I don’t see it getting better before it gets worse.”

– Sam Stovall, CFRA Chief Investment Strategist

Rapeepong Puttakumwong via Getty Images

Inflation

According to the Labor Department’s Consumer Price Index, inflation rates are worse than at any point since December of 1990. Over the past year, the average price of common products like gasoline, groceries, healthcare, and rent, have gone up 6.2%. Over the summer, there were similar isolated price increases, but the problem now applies to all products. 

Economists say this means that even if you received a 5% raise in 2021, you’re still essentially making less money than you were in 2020.

Biden Administration Messaging

The Biden administration has often said rising inflation rates would only impact the wealthy. In October, White House Chief Of Staff Ron Klain tweeted that inflation was a “high class problem” and White House Press Secretary Jen Psaki said inflation was rising because the unemployment rate had gone down, and the economy is turning back on. 

COVID’s Role

Most economists agree a certain level of inflation is normal after an economic recession like the one Americans recently experienced. As millions of people quickly return to the workforce, supply and demand can be affected, which impacts inflation rates. 

However, economists also point to the role of government spending. Over the last two years, more than $6 trillion were poured into the economy as part of COVID relief, which is about a third of the country’s entire GDP. The more money there is in circulation, the less a dollar is worth.

The Federal Reserve is also being blamed for not doing enough to address the issue since one of their main responsibilities is to keep inflation around 2%. 

Looking Ahead: Officials from the Federal Reserve have repeatedly said not to panic, but there seems to be evidence showing the issue is going to worsen as winter approaches and energy costs begin to increase.

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