By Steve Levy
The New York State Comptroller’s Office issued a report last week entitled “Number of New Yorkers going hungry increases despite and improving economy.” https://www.osc.ny.gov/press/releases/2024/05/dinapoli-number-new-yorkers-going-hungry-increases-despite-improving-economy?utm_content=20240504&utm_medium=email&utm_source=weekly+news
This paradox underscores how misleading it could be to claim the economy is doing well simply because the unemployment rate is relatively low, and the increase in inflation has ebbed from its peak of 9%.
The mistake many pundits make is that they neglect to factor in that inflation is cumulative.
Yes, inflation has cooled to a 3-4% increase earlier last year, but that’s on top of huge increases in the prior years.
In total, inflation is up nearly 20% in President Biden‘s tenure.
It’s little solace to a poor working-class family that $3.50 gas or $6 milk may only go up “only” another 3% this year.
The other factor overlooked is that we are measuring inflation differently than we did in the Jimmy Carter years. (For instance, housing costs are now omitted.) If we did an apples-to-apples comparison, using the same formula as we did then, today’s inflation rate would mirror the historic rates of that time. https://budget.house.gov/press-release/smith-op-ed-joe-bidens-inflation-crisis-is-worse-than-jimmy-carters/
And speaking of the Carter years, we may be heading toward the stagflation that existed back then. That was a brutal combination of high inflation with low growth.
GDP grew an anemic 1.6% in the last quarter. Ironically, that’s the same tepid growth rate in Obama’s last year.
This is what 7% interest rates will do to an economy.
It was Democratic economists such as Lawrence Summers and Steve Rattner who warned Joe Biden that spending trillions of extra dollars in 2021 after the economy had already come back from Covid would be a historic mistake that would lead to runaway inflation. They were right, and he ignored them.
Biden thought he would be helping the poor by spending in such a reckless manner. Well, now we see via the Comptroller’s report that it is the poor who are hurt most of all when inflation runs rampant. Will anyone learn their lesson?