Morton Marcus: Inflation: The Cost of Getting What You Want
Last year will be the missing year.
Before and after 2020 will be the years that we see as the continuum of our lives. 2020 will be the Great Interruption, a sinkhole for some and just a dip for others caused by COVID-19.
Data for 2020 will be rejected as a historical ellipse. But such data should not be ignored because it tells us a lot about ourselves and our nation in a time of great stress.
Recently, the US Census Bureau released a statement read by TV presenters with great solemnity: “In 2021, 27.1 million Americans reported living in a different residence than a year earlier…. This represents an 8.4% move rate, the lowest documented rate in over 70 years. “
Get this? Over 70 years! So what were you expecting? The COVID disruptions have kept us at home, but with a new sense of the value of being home. The value was found in working from home, not in the daily commute, in being home to care for children or other family members and rediscovering the strength in ourselves.
Since we found new value in our homes, we were reluctant to sell them to others who felt limited by their existing accommodation. In addition, a large number of tenants have sought to become owners. With this increase in demand for homes, but the reluctance of most homeowners to sell, prices have skyrocketed.
The builders couldn’t respond quickly enough. With the COVID pandemic, experienced workers could not be found. Supplies were exhausted and stocks were exhausted. The prices of all kinds of goods needed by builders and their sellers (such as lumber) have reached or exceeded old highs.
Higher house prices meant higher equity, giving more borrowing power to those with jobs. Additionally, middle-income consumers were willing to spend government-sent money to stimulate the economy. In addition, unprecedented low interest rates have made mortgages more affordable and loans for cars, furniture and other items more accessible.
Last year spilled over into 2021. Orders were saved because suppliers could not deliver enough. People who never thought about it suddenly understood supply chains. At level crossings we saw freight trains of over 100 cars passing by, knowing that even all those shipping containers weren’t enough to meet everything we wanted.
Now news readers can breathe, and cable pontifiers can blow inflation. “Nasty inflation” caused by “too much money” sent to consumers by a government successfully delivering what voters wanted … a stronger economy. “Unjustified inflation” caused by consumers who consume and suppliers who attempt to meet those demands.
Last year and this year were the roller coaster years. As we enter 2022, we are a little dizzy. Not enough citizens and politicians still realize that our country has underinvested in research, education, public health and infrastructure.
Once again, consumerism has overtaken common sense.