How big a deal is inflation?
This is Trahant Reports.
The country has been through a long period of stable prices. Yes .. the cost of things always goes up. But for most of the past fifty years there have also been significant price decreases, the costs of computers is a good example of that.
You have to go back to the 1970s to look at how inflation impacts people in really difficult ways.
Inflation is a general increase in the prices of everything … so the dollars you are earning are worth less. It’s especially tough on people living on fixed incomes, such as retirees, because they cannot compete for new better paying jobs the same way a younger person can.
I recently asked Patrice Kunesh about inflation. Kunesh, who is Standing Rock descent, is a former Federal Reserve Bank official and she now runs her own consulting firm, Peȟíŋ Haha Consulting.
“You know, more spending leads to higher prices and it’s a supply demand issue. And, uh, what we really want to be careful is that we’re spending prudently, we’re spending on necessities. We’re not spending beyond our means. Um, and, uh, I do think we’re going to be able to manage inflation, but it’s always a concern when we have a surge of spending.”
“You know, what we’re prices are going up is like lumber for building materials, building homes, and so forth. Uh, we cannot find the microchips that, you know, that, uh, you know, power, everything we do from our cars to our refrigerators, there’s a scarcity. And when you have scarcity prices go up and that creates inflation. So I think we’re going to, uh, balance out. Uh, but personally we need to be concerned …”
The data from the US Department of Commerce and the Federal Reserve Bank are already showing signs of inflation, the price “basket” of certain goods increased by 4.2 percent in April when the ideal goal is closer to 2 percent.
There are two ways that inflation will change how we do business, post-pandemic. Think of the impact on people who want a job. Employers will have to pay more to recruit talent. Already there are signs in some industries, such as food service, that there are not enough workers to fill key jobs.
A second impact will be increasing the cost of replacing and investing in infrastructure. Every bridge, road, and tunnel will cost more both in terms of materials and people who do the work. That means tribes, and other governments, will have to raise more money just to produce the same amount of work.
Fifty years ago inflation was a real problem, running as high as 13.5 percent per year. In the last decade the numbers have been close to the ideal at or below 2 percent per year. That’s why this is a history that is not worth repeating.
I am Mark Trahant.