Americans should get ready for sticker shock in the new Biden economy. There are troubling signs that the country is heading in a difficult direction. Food and gas prices are rising precipitously, and inflation on other goods and services is skyrocketing.
Rising Inflation Concerns Economists
Economists predicted that the PCE Price Index Excluding Food and Energy would rise by 2.9% in April. Also called the core PCE (personal consumption expenditures) index, this report measures the prices for goods and services that consumers pay each month.
Instead of the predicted 2.9%, the core PCE rose by 3.1%. This is the largest increase since the 90s. Larry Summers, the Treasury Secretary under Obama, claimed that the indicators on inflation are a “flashing red alarm” — and that was before April’s data became available.
Housing Costs Go Sky-High
The steep upward trend in housing costs is another sign of trouble for the US economy. Prices of building materials such as steel and lumber have skyrocketed. From January 2020 to January 2021, the price for softwood lumber went up 73%. Steel costs are a record high — around three times the 20-year average.
It isn’t just the cost of building new that has increased. Prices are going up for existing homes as well. Sales increased 24%, and inventory is the lowest it’s been since the 90s.
The staggering increase pushes middle-class and lower-income families out of the housing market.
Biden Continues Spending
Biden revealed his first budget for 2022 — a proposed $6 trillion in spending for a nation already trillions of dollars in debt.
$800 billion of the budget is earmarked for climate change. This spike in spending is likely to cause even more inflation woes, triggering a rise in interest rates as well.