Americans Are Still Really Worried About Inflation

“It makes sense that the recent run of inflation would leave a psychological scar. After all, the peak inflation rate of 9.1 percent in June 2022 was not only the highest annualized rate seen in more than four decades, it was also more than twice as high as the average inflation rate in any year since 1991. That means prices were rising two to three times more quickly than during the worst bout with inflation that most Americans can easily recall.
In March, the annual inflation rate was 3.5 percent. Yes, that’s 60 percent lower than the peak rate in June 2022, but that’s still higher than the average annual rate in every single year between 1991 and 2021, except for 2008.

Meanwhile, higher interest rates are likely compounding the perception that inflation is a major problem.

From an economic perspective, those higher interest rates are necessary to calm inflation. But from a consumer’s perspective, the money in your wallet now has less buying power and it’s more expensive to borrow money for a car loan or mortgage. It’s a squeeze from both directions.”

https://reason.com/2024/05/03/americans-are-still-really-worried-about-inflation/

Say No to This: America’s Fiscal Norms Are in Decline

“Leeper highlights three fiscal norms. One, established in one of Hamilton’s 1790 reports, is that budget deficits should be followed by budget surpluses (i.e., the government pays off its debts). The second is that ordinary spending should be paid for with taxes while emergency spending can be paid with borrowed funds to be repaid later. The third is that austerity becomes necessary when interest payments on outstanding debt become a sufficiently large fraction of federal expenditures.
Despite their informal nature, these fiscal norms have historically constrained U.S. fiscal policy in a meaningful way, even without a gold standard or other formal devices often found in history. They’re also important because they determine long-term expectations for fiscal policy. These expectations, in turn, influence bond prices, inflation, and the real economy, keeping things relatively stable.

So far, adherence to these informal fiscal norms has paid off. U.S. Treasuries are a cornerstone of the global financial system, serving functions akin to money worldwide. However, the norms are weakening.”

https://reason.com/2024/04/11/say-no-to-this-americas-fiscal-norms-are-in-decline/

Most Americans Aren’t Buying Biden’s Misleading Narrative That the Economy Is Getting Better

“”Pre-1983, mortgage costs were in the CPI as were car payments pre-1998. Now, price indexes do not include borrowing costs. Thus, when interest rates jumped last year, official inflation did not fully capture the effects it would have on consumer well-being.”
Indeed, if we measured inflation as we did in the 1970s, the inflation that started in 2021 would have peaked at 18 percent—double its reported peak. That’s higher than the worst of the 1970 and ’80s. Inflation’s current annual rate would be about 8 percent.”

https://reason.com/2024/03/28/most-americans-arent-buying-bidens-misleading-narrative-that-the-economy-is-getting-better/

Report: Trump’s Proposed Tariff Would Cost Families $1,500 Annually

“Former President Donald Trump’s plan to impose a 10 percent tariff on all imports to the United States would hike prices and cost the average American household $1,500 annually.
That’s the sobering conclusion reached by a new economic analysis from the Center for American Progress (CAP) Action Fund, a left-leaning think tank and advocacy organization. The proposed tariff, which would be applied on top of existing tariffs according to Trump’s campaign, would translate into $1,500 in higher costs for the average American household. That includes “a $90 tax increase on food, a $90 tax increase on prescription drugs, and a $120 tax increase on oil and petroleum products,” according to Brendan Duke and Ryan Mulholland, the two economists who authored the report.”

https://reason.com/2024/03/28/report-trumps-proposed-tariff-would-cost-families-1500-annually/

Politicians Are Showering Manufacturing Companies With Crony Subsidies for ‘Job Creation.’ It Won’t Work.

“Even if these subsidies were to create a manufacturing boom, it probably wouldn’t lead to an employment boom because most manufacturing output today is produced by robots.”

https://reason.com/2024/04/04/politicians-are-showering-manufacturing-companies-with-crony-subsidies-for-job-creation-it-wont-work/

Marco Rubio Is Wrong About Industrial Policy

“Rubio doesn’t even get through the first paragraph of the piece before making a significant error. “Today,” he writes, Congress no longer views industrial policy with the same skepticism that it once did, but “what replaces unfettered free trade remains hotly debated.”
Unfettered free trade? That’s hardly an accurate description of the current status quo in the United States—a fact that Rubio surely knows, since Florida’s sugar and fruit industries are the beneficiaries of some of the most aggressive protectionist policies on the books. Even before former President Donald Trump ramped up the use of tariffs, America had more protectionist policies than other large, developed economies: A 2015 report from Credit Suisse called the United States the world’s most protectionist developed nation.

Rubio’s inability to describe the current status quo matters. It’s a failure of the ideological Turing Test, and it reveals that he misunderstands the economic policies he’s trying to shift—or that he is deliberately misinforming readers about them. Either way, this ought to call the rest of his claims into question.

Unfortunately, that’s far from the only mistake in the piece.”

https://reason.com/2024/04/04/marco-rubio-is-wrong-about-industrial-policy/

Minimum Wage Laws Make for Great Politics, but Fewer Jobs

“if you artificially hike the price of labor, you reduce demand for workers. In California, this is playing out in terms of lost jobs, increased automation, and other consequences that result when politicians signal a unicorns-and-rainbows vision of the marketplace to their allies and leave the public to deal with the resulting mess.”

“”A California state law is set to raise fast-food workers’ wages in April to $20 an hour. Some restaurants there are already laying off staff and reducing hours for workers as they try to cut costs,” Heather Haddon reported for The Wall Street Journal. “California restaurants, particularly pizza joints, have outlined plans to cut hundreds of jobs in the months leading up to the April 1 wage mandate, according to state records. Other operators said they have halted hiring or are scaling back workers’ hours.”

This comes after California Pizza Hut franchisees laid off over 1,200 delivery drivers in anticipation of the minimum wage hike. It comes in the wake of McDonald’s and Chipotle Mexican Grill announcing higher menu prices to accommodate labor costs; those higher prices can be expected to drive away some customers, resulting in less need for workers to service lower demand.”

“less customer traffic isn’t the only way to reduce staffing needs; you can also replace people with technology. Chipotle announced plans to use robots to assemble burrito bowls. El Pollo Loco is doing the same for making salsa. Other restaurants are adopting automated fryers and burger-flippers to reduce the costs of employees.”

https://reason.com/2024/03/29/minimum-wage-laws-make-for-great-politics-but-fewer-jobs/