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LIVING IN ANOTHER WORLD: Joe Says GOP Will Make Inflation Worse

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President Joe Biden participates in a pull-aside meeting with AFL-CIO President Liz Shuler, Tuesday, June 14, 2022, at the Philadelphia Convention Center in Philadelphia. (Official White House Photo by Adam Schultz)

You have been feeling the pain of inflation everywhere you go. It’s a phenomenon that started shortly after Joe Biden moved into the White House, and, despite his assurances that he’s doing something, has persisted ever since. Biden even signed a bill that Democrats arrogantly named the “Inflation Reduction Act of 2022.” Well, 2022 is quickly coming to an end, and it doesn’t appear any inflation has been reduced. In fact, Core CPI inflation hit a 40-year high yesterday. The Wall Street Journal reports:

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So much for the hope that inflation, once unleashed, would be easy to reduce. That mirage vanished Thursday with the September report that showed a rebound in prices from July and August. The Federal Reserve has a lot more monetary tightening to do.

Join Journal Editorial Page Editor Paul Gigot and Columnists Kimberley Strassel and Karl Rove live from Dallas as they discuss how inflation, Donald Trump and the Supreme Court’s abortion ruling will affect the midterms. What’s at stake in the House and Senate? Will the red wave hit as many predict? The panel will break down what the election will mean for the economy, President Biden’s legislative agenda, and the run up to the 2024 presidential race.

The consumer-price index rose 0.4% in September, after two flat months owing largely to falling energy prices. Gasoline prices kept falling in September, but the decline was swamped by rising prices for other goods and services. The 12-month price rise stayed at a very high 8.2%.

Food kept rising at a 0.8% clip, or 11.2% over 12 months—unless you eat at home, where you paid 13% more. The worst news is that the so-called core index that excludes food and energy hit a 40-year high, rising 6.6% over the past 12 months. Service prices (less energy services) accelerated and are up 6.7% in a year.

Prices rose sharply last month for car rentals (2.5%), health insurance (2.1%), vehicle repair and maintenance (1.9%), and airline fares (0.8%). Americans can save money by not traveling—at least until the holidays—but most can’t afford to go without health insurance or a car if their current jalopy breaks down.

Shelter costs are also driving the core index, with owners’ equivalent rent up 6.7% in a year, the largest annual increase ever. The shelter measure usually lags increases in home prices and rents, which soared coming out of the pandemic. The Fed’s interest-rate increases have started to cool the housing market in some cities, and the question is how fast this will roll into the CPI calculation. The average fixed 30-year mortgage rate hit a new 20-year high of 6.92% Thursday, which will price more buyers out of the market.

The important point for the Fed is that inflation has become entrenched across much of the economy. Even if it has peaked, the breadth of the price increases will take time and tighter money to reduce. This raises the risk of recession or some financial accident from misplaced investment bets during the fantasy years when Modern Monetary Theory was in vogue.

As if to assure the American public that he has no idea what’s going on, Joe Biden said recently that if Americans gave the GOP control of Congress in November, inflation would get worse. Watch:

Biden must be living in another world. Democrats have controlled the House since 2018, and the Senate since 2020, along with Biden in the White House. Democrats have presided over the era of inflation. You can make the case that it’s the Fed’s fault (and in large part that’s true), but you can’t say that the GOP would make it worse with no evidence.

Action Line: Prepare your family for more inflation. Prepare your portfolio with strategies that take inflation and rising rates into account. If you need help, get in touch with me. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter, and you’ll learn more about me and how I help American families improve their personal and financial security.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.