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Soaring prices are becoming an economic and political minefield for the Biden administration, said Megan Cassella at Politico. The cost of goods and services continued to tick higher in September and is now up 5.4 percent from a year earlier. "The massive price spikes to travel services, used cars, and other goods" tied to the economy's reopening this summer "were initially dismissed as fleeting phenomena." But ongoing supply-chain disruptions and a deepening labor shortage combined with unleashed consumer demand is looking like a recipe for disaster as the United States heads into the holiday season. "Concern about the potential political fallout" is growing as more "voters feel the squeeze of elevated prices" at the grocery store and gas pump.
"It's hard to think of anything more unpopular with the electorate than paying a lot for gas or food," said David Harsanyi at New York Post. "Biden has waved away inflation concerns on numerous occasions"; the administration claims that the price hikes we are seeing are "transitory." Meanwhile, the Department of Energy says heating bills could "jump as much as 54 percent compared with last winter." Democrats are so "unmoored from economic reality" that they are still pushing energy policies that will send prices even higher. For older people who remember the 1970s, inflation conjures images of "instant wealth destruction." The GOP "sees an opening" here, said Gabriel Rubin and Catherine Lucey at The Wall Street Journal. "This is going to be really bad for the American people, and I'm going to tell you that Democrats own it," said Rep. Tom Emmer (R.-Minn.).
Just stop it with 1970s analogies, said Ed Kilgore at New York magazine. Sure, Republicans want to "compare every Democratic president to Jimmy Carter." But the economic reality was that in 1979, the inflation rate was 13.3 percent and interest rates were 11 percent jumping to 20 percent in 1980. We're at less than 1 percent interest today. I'm no longer as certain that inflation is transitory, said Paul Krugman at The New York Times, but raising interest rates and slowing down the economy "based on what we know now would be a big mistake." If prices keep rising, bringing them back down again "could be painful — though doable." But putting on the brakes "to head off an inflation problem that proves exaggerated" could damage the economic recovery "in ways that are hard to reverse."
"The real question is how American families and businesses react to this new era of uncomfortable inflation," said Heather Long in The Washington Post. The longer prices remain high, the more likely it is that habits will start to change. Consumers are already "getting spooked by higher prices" for houses and cars. And there are "early signs of wage-price spirals." Whitney Reitz, who operates a taco franchise in Wichita, raised menu prices twice this year after bumping starting wages from $8 to $12 an hour to attract workers. She thinks the cycle isn't over. "A local restaurant just posted 'Now hiring! Starting hostess at $20 an hour,'" Reitz said. "Just seeing that in writing put a little fear in me."
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.