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Abroken clock is still right twice a day. And even CNN stumbles onto an accurate interpretation of the news once in a while.
On New Day this morning, hosts John Berman and Christine Romans broke down the latest data showing spikes in consumer prices with a degree of clarity and economic comprehension not often found in the mainstream media.
“Consumer [price] inflation is the hottest it’s been in 13 years,” Berman said in introducing the segment. “These are the prices you pay. These prices really hit you in very specific ways; you feel it just going to the gas station.”
“It’s sticker shock,” Romans agreed. “There are a lot of different reasons. There’s a quirk of the calendar and math — because remember last year the economy just fell apart — so we’re comparing falling down to this big rally. But look at gas prices, for example.”
“Last year, if you had a typical car with 12 gallons of gas, you paid $26 to fill it up,” she noted. “This year, you’re paying $37. That’s $11—say you fill up every week—that’s real money out of your pocket.”
“And look at other consumer prices. Say you have $100 in groceries. This year, you’re paying about $2.40 more. Maybe you can make some changes in what you’re buying, but those are real increases.”
She also pointed out the huge spike in used car prices, which came in at a whopping 45.2 percent. “$26,000 [on average] for a used car, we’ve never seen that before.”
“This is hitting people who have less money the hardest,” she explained. She pointed out that people lower on the income spectrum spend a higher percentage of their money on average and spend more of it on the kind of basic consumer essentials that are experiencing price inflation. So, Romans correctly concludes, the consumer price inflation we’re witnessing hurts working-class and poorer Americans hardest. Those who can least afford it.
“Everyone is debating whether inflation is temporary,” she notes. “But for right now, it’s still really, really hurting low-income Americans.”
Here’s where CNN’s largely laudable report goes astray.
“All of this is because of COVID, and just the craziness that happened to the economy,” Romans concludes. While the coronavirus surely was a factor, this incomplete answer overlooks the enormous role that government policy, not the pandemic itself, has played in the current surge in prices.
It was heavy-handed government lockdowns, not the virus itself, that created the mismatch between demand and supply driving much of the rise in prices. And the Federal Reserve, the central bank that controls the supply of US dollars, created trillions of new dollars and injected them into the economy to “stimulate” the recovery. Those new dollars make all dollars less valuable and prices higher.