“GOP state attorneys general, as well as many of their Democratic counterparts, have moved to stop companies from charging what they view as exorbitant increases in the cost of some goods in certain circumstances.
In Texas, Attorney General Ken Paxton, a Republican, sued a large egg supplier for raising prices by about 300 percent at the height of the pandemic lockdowns in 2020.
Kris Kobach, the Republican attorney general of Kansas, is suing a large natural gas supplier over allegations that it gouged consumers in the aftermath of a 2021 winter storm. And in storm-prone Florida, state officials widely publicize a law that prohibits sharp price increases in essential items during emergencies.
“Nobody likes to be gouged when they’ve lost their roof,” said Trish Conners, a former chief deputy attorney general of Florida now in private practice at the firm Stearns Weaver Miller. The state laws address the “fundamental public safety role that state AGs have, and it’s largely bipartisan. You don’t see too much difference between AGs in that regard.”
The state laws underscore some of the benefits and challenges that Harris may face in selling her plan. It is broadly popular for politicians to shield consumers from excessive prices — even if many economists disagree with the approach. But at the same time, most states have limited their intervention in the market to a far narrower set of circumstances, and Harris’ plan for a national approach would likely represent a major expansion of the role of government in prices.
Some 37 states have laws to address price gouging, according to the National Conference of State Legislatures. Most of the laws have specific triggers — such as a state of emergency or disaster — and prohibit sellers of certain essential goods from jacking up prices beyond a certain threshold. Some states have a numerical threshold of, say, 15 or 25 percent, while others have vaguer prohibitions on “excessive” or “unconscionable” increases.
Florida Republican Attorney General Ashley Moody vowed to vigorously enforce the price gouging law as hurricane season began earlier this year. Her office has a dedicated hotline, app and website for consumers to report instances of gouging during emergencies.”
“Volatility in natural gas prices, including the huge spikes following Russia’s invasion of Ukraine, has certainly contributed to some price increases on the supply side. But the transmission and distribution costs have actually been going up at twice the rate of inflation nationwide, the report’s author, Brendan Pierpont, told me.
“That trend of increasing transmission and distribution costs is something that is noticeable all across the country, and so I think it’s an underlying factor in rate increases everywhere,” Pierpont said.
Utility companies have a lot of freedom in setting rates for transmission and distribution — and that directly contributes to how much profit they make. Utilities get to pick what gets upgraded when, and they also have an incentive to spend heavily, thanks to regulations that allow them to collect return on investment, usually around 10 percent, for those expenditures. This is actually built into the price most people pay for electricity.
Here’s how it works: Every year, utility companies ask regulators to approve a “revenue requirement,” which is basically a budget for what the utilities think it will cost to deliver enough electricity to their customers. Those estimates include spending on new equipment but not the cost of repairing old equipment. It also includes that return on investment, or profit, which regulators regularly approve. In Pierpont’s words, “That rate of return has a direct link to the costs that customers pay for electricity.”
What utilities don’t seem to be doing, however, is expanding the grid in a way that would benefit clean energy producers, the Energy Innovation report finds. Investments tend to cover local upgrades, like installing new metering equipment, rather than installing the high-voltage transmission lines that renewable energy sources need to connect to the grid. Meanwhile, consumers are facing more frequent outages that last longer, while utilities keep making more money for installing new, potentially unnecessary equipment.
“It’s like the utilities have a rewards credit card,” said Joel Rosenberg of Rewiring America, a nonprofit focused on electrification. “And they get to keep the rewards for how much they spend, and the [customers] have to pay off the bill, even if that bill takes 80 years to pay off.”
This plays right into the misconception that investment in renewables leads to higher rates.
Many of the states leading the way to clean energy are actually seeing lower energy prices than the rest of the country. Data from the US Energy Information Administration shows that 17 states, including California and Massachusetts, have increased their share of renewable energy sources by more than 20 percent since 2010. And with the exception of California, all of those states have seen the price of residential rate increases rise more slowly than inflation. The higher rates in California can be explained, in part, by rate increases to account for wildfire prevention. In Massachusetts, natural gas is the problem.
States where residents are seeing electricity bills that outpace inflation tend to be the ones with the highest reliance on natural gas, as highlighted in the Energy Innovation report. Some states in New England, including Massachusetts, have depended on natural gas for around 60 percent of electricity generation since 2020 and have seen prices increase by around 10 percent in the same period. Volatility in the price of natural gas also means that some of the highest price spikes are spread out over several years, so there could be more high prices in these states’ futures.”
“The Fed hiked interest rates around the same time that the supply chain got back up and running, which makes it hard to assign credit. But there’s an even more fundamental issue here. “Anything in macroeconomics is very hard to empirically test,” says Vox senior correspondent Dylan Matthews. “You can’t run experiments with the Fed.”
Ultimately, Matthews says that inflation — and our economy as a whole — is still so hard to understand because of the nature of money. “Money feels like this very hard thing, but money is also a psychological idea. Money is this idea that we can put numbers on what we owe to each other, even as we understand that these numbers are kind of made up.”
Inflation, in a sense, is a psychological phenomenon. “So understanding inflation, I think, is ultimately about understanding people and how they relate to each other. And that’s the ultimate mystery.””
“there are three reasons for Democrats to fear that slowing inflation will prove too little, too late.
For one thing, voters’ distrust of Biden’s economic management appears unshakeable. In a recent Gallup poll, just 38 percent of Americans expressed confidence in Biden to “do the right thing for the economy.” That is up a smidgen from Biden’s 35 percent mark in 2023, but it is still the worst economic approval that any modern president has suffered in Gallup’s polling, with the exception of George W. Bush immediately after the financial crisis. By contrast, 46 percent of voters have confidence in Trump’s economic management.
In RealClearPolitics’s average of recent surveys, Americans disapprove of Biden’s handling of the economy by a 17.6 point margin. And voters’ appraisal of Biden’s economic acumen has not substantially improved in recent months, even as inflation has declined. By the end of Trump’s term, on the other hand, voters approved of his economic management by a 7.8 percent margin.
Thus, the idea that Biden is personally responsible for the surge of inflation in 2022 — and that he cannot be trusted to effectively manage the economy for that reason — appears deeply rooted in voters’ minds. The fact that wages have been rising much faster than prices for more than a year has left no dent on this impression. Another few months of falling inflation could move the needle a bit, but there’s little reason to assume that such a development will dramatically change public opinion.
Second, relatedly, historical precedent suggests that the economy’s performance up to this point in Biden’s term will matter more than its performance from now until November. According to Democratic data scientist David Shor, when you examine the relationship between GDP growth and past incumbent presidents’ electoral outcomes, their economic records between inauguration and April of their reelection year count for much more than economic conditions in their campaigns’ final months.
Finally, if inflation has truly been defeated, victory has come too late to yield substantial interest rate cuts before November. The Federal Reserve declined to reduce rates after its meeting this week and forecast a single, quarter-percentage-point cut by year’s end. Investors predict that such a cut will come in September at the earliest. Even if the rate cut comes before Election Day, it would still leave Americans with dramatically higher borrowing costs than they faced when Biden was inaugurated.
It is conceivable that a small September cut may help the president a bit at the margins. Another possibility is that Biden will effectively shepherd the nation out of an economic crisis and deliver it into a low-inflation, high-employment economy and then promptly hand the White House back to Donald Trump, who will proceed to receive the lion’s share of the credit when the Fed slashes interest rates next year.”
Millennials & Gen-Z are Poorer Than Ever (Here’s Why) Humphrey Yang. 2023 5 17. Have the Boomers Pinched Their Children’s Futures? – with Lord David Willetts The Royal Institution. 2020 1 23. https://www.youtube.com/watch?v=ZuXzvjBYW8A Some numbers at beginning for UK and Europe. The
“Early in his column, Powell writes that since 2019, America’s working-class has “weathered 20 percent inflation and now rising interest rates—which means they’ve lost more than a fifth of their purchasing power.”
This is simply false. You cannot measure a trend in workers’ purchasing power over time by looking exclusively at changes in their costs. Since 1947, the consumer price index has risen by roughly 1,400 percent. If we applied Powell’s logic to that data point, we would conclude that Americans’ purchasing power had apocalyptically collapsed since the Truman administration. But of course, Americans are not poorer today than they were in 1947 — because since that year, the median US household income has increased by roughly 2,400 percent.
Similarly, although consumer prices have risen 20 percent since 2019, the average hourly wage among nonmanagerial workers in the US has grown by 25 percent over the same period. Put differently, at least for Americans who don’t debt-finance their expenditures, purchasing power is higher today than it was in 2019.”