Economic growth is sluggish. In the first quarter of 2011, the economy grew at about 1.8%. Unemployment remains high, and it is coming down at an infinitesimal rate. Ask any recent college graduate. There are hardly any jobs to be had. We are also told that the inflation rate is 2.7% with core inflation at 1.2%, but that hides a crucial fact.
Remember Jimmy Carter back in the late 1970? Well that is where we are right now. Niall Ferguson, who knows a thing or two about money, points out that the manner in which the Bureau of Labor Statistics measures inflation has been “improved” some twenty-four times since 1978. By the standard that was used in Carter's day, inflation right now exceeds 10%.
If you doubt that inflation is now in the double digits, go fill your car with gas. I did so with my 1991 Toyota Corolla (which is not a muscle car) three hours ago. The total cost was a painful $35.92. I paid over $4.00 a gallon – twice what I paid back when Barack Obama became President.
If that leaves you unimpressed, consult the person in your household who buys groceries. Or fire up Quicken and check your expenditures on food over the last couple of years. Ours went up something like 30% between 2009 and the present. You can either believe the official statistics or you can believe your own lying eyes.
There is a method to this madness. The current yardstick for inflation is designed to filter out energy costs and groceries – which are volatile. It aims at isolating the price increases that persist. But in the current environment this is misleading. We are not apt to get wage inflation in a time of high unemployment. Nor are we apt to see housing costs soar at a time when hundreds of thousands of houses are in foreclosure. Ben Bernanke thinks that he therefore has a free hand and can, in effect, print money wildly without there being an inflationary consequence. Commodity and grocery prices prove that he is wrong. Misled by the measuring stick that he has employed, he has ushered us into a new era of stagflation.
And here is the kicker. Everyone senses it. Consider the following which I lifted from Glenn Reynolds three days ago:
RIGHT TRACK OR WRONG TRACK: 21% Say U.S. Heading in Right Direction, A New Low.
Also: Four in 10 approve of Obama's handling of economy; marks all-time low.
UPDATE: Obama Approval At Lowest Level Ever In Pennsylvania, Quinnipiac University Poll Finds. “President Obama, who carried Pennsylvania 55 – 44 percent in the 2008 election, is underwater mostly because of his deterioration among independent voters, who disapprove of his performance 57 – 37 percent, compared to 50 – 46 percent approval in February.” But he's even losing Democrats.
ANOTHER UPDATE: Reader Bill Archer writes:
As a PA resident I can attest to the sea change in attitudes towards Barack Obama here.
It's public, it's palpable and it's entirely due to inflation.
It's astonishing to me that a bunch of guys who are supposed to be so smart think that women aren't going to the grocery store and leaving in a state of shock, disbelief and, occasionally, panic.
And a Democrat who frightens women cannot win anything. Period.
I just started playing a sort of instant citizen poll at stores. It began a week or so ago at Sams' Club:
I was in one of THOSE lines and ended up chatting with a well dressed middle aged woman with a cart half full of grocery items.
I made mention of the fact that while I didn't normally make the hike to Sams' that with prices going up I figured I had to make the effort.
She exploded: Prices are sky high, she's feeding three kids, eating store brands and sale items but can't afford to stock up, on and on.
Then the lady in front of HER piped in: if prices keep going up she doesn't know what she'll do, their budget is already at the breaking point, trying to keep a daughter in college, off she goes.
Then a man in the next line over heard them and HE jumped in: this is ridiculous, Washington is killing us, economy broken, he's off to the races.
I thought maybe this was just a coincidence, so I've started the same conversation in store lines twice more in the past week and it's exactly the same: people are frightened and EVERYONE wants to talk about it out loud.
The interesting thing to me is that everyone used to be very reluctant to speak out in public against Obama. You were always afraid some leftie whackjob would hear you and tear into you. You know what I mean.
But now the gloves are off, people are freaking out and Obama can raise FIVE billion dollars for his campaign and organize until the cows come home and call everyone in the country a racist until he turns blue but it's not going to convince anyone that they're not paying an arm and a leg for half a cart worth of food.
There is no more basic thing to people, and it's off the hook.
I don't see how the Republicans could possibly mess this up. Then again, after a lifetime of watching them do just that, if there's way they'll find it.
Indeed. They don't call ‘em the stupid party for nothing. But yeah, it's hard to hide inflation. Unemployment only hurts the unemployed; EVERYONE feels inflation.
Everyone does, in fact, feel inflation. Politically, this suggests that I may well be right in recently suggesting here, here, here, and here that there is a political landslide in the offing. Barack Obama may go down in the history books alongside Herbert Hoover. Stagflation is not going to abate between now and the second Tuesday in November, 2012. And in the interim the misery index is going to rise.
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