In Ernest Hemingway's 1926 novel The Sun Also Rises, one character is asked how he went bankrupt. "Two ways," the man replies, "Gradually and then suddenly."
 
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Breitbart Business Digest
April 09, 2021
 

Today's Top Stories From the Breitbart News Desk

In Ernest Hemingway's 1926 novel The Sun Also Rises, one character is asked how he went bankrupt. “Two ways," the man replies, "Gradually and then suddenly." Something of this could be seen in Friday's Producer Price Index figures, which showed prices moving up more than twice as much as expected on a month-to-month basis in March. Compared with February, prices moved up by one percent, speeding past the four-tenths of a percentage point expected.

The numbers are even more startling on an annual basis. Annual inflation kicked up to 4.2 percent, the highest figure since September 2011. Of course, the crazy year of 2020 scrambles the signals a bit. Last year, we were headed into mandatory lockdowns in March, with businesses shuttered and people advised that touching a cereal box might contaminate them with the deadly China plague. Prices dropped in February and March. As a result, the year-over-year gains exaggerate how much inflation is really occuring.

But economists were well aware of this so-called "base effect" going into the month, and still they underestimated inflationary pressure. Fed chair Jerome Powell has assured us that any rise in inflation is likely to be “transitory," but if economists miss the size of the price gains, how confident can we be that they'll correctly forecast the duration of rising prices?

Price gains were particularly concentrated in energy and food. Gasoline prices rose 8.8 percent in March and are up over 50 percent compared with a year ago, when prices were depressed by people sheltering at home. Food prices rose half a percentage point compared with February and are up 5.1 percent compared with a year ago.

Food and transportation make up a far larger share of household expenses for families at the bottom end of the income ladder than those at the top. So the inflation we are experiencing is weighing particularly hard on the poor and working class. Biden, who ran on raising taxes only on the wealthy, is presiding over a regressive stealth tax hike on the bottom two quintiles of the income brackets.

Add to that the bad news on unemployment—jobless claims unexpectedly jumped much higher last week and black unemployment is back up at 9.6 percent—and it's clear that in these early months of the Biden administration, America is not moving toward more equality or opportunity. Stimulus checks that drive up the price of food and gasoline do little to help the poor. That should give some lawmakers considering the next $2.3 trillion spending plan Biden has put on the table at least a moment's pause.

Alex Marlow & John Carney
Breitbart News Network

 
 

TOP STORY

 
Carney: Welcome to Biden’s America, Where the Poor Pay More
The first two months of the presidency of Joe Biden have not been a particularly auspicious period in which to be black, poor, or working class in America. The unemployment rate for black Americans fell for eight consecutive months as Donald Trump’s tenure in the White House marched toward its end, falling from 16.7 percent to 9.2 percent in January, one of the swiftest decline in unemployment in recorded economic history. It jumped back up to 9.9 percent in February and only slightly recovered to 9.6 percent in March. It isn’t just black Americans that are suffering. Lower-income Americans of all races have also seen setbacks in the early months of the Biden administration. [Click here for more]
 

IN OTHER STORIES...

Inflation Scare: Producer Price Index Surges Much Higher Than Expected
Prices received by wholesalers and producers of goods and services rose much faster than expected in March, data from the Bureau of Labor Statistics showed Friday. The Producer Price Index rose 1 percent in March, more than twice the consensus forecast. On a year-over-year basis, the index is up 4.2 percent, higher than the expected 3.8 percent. That is the fastest pace of price gains since September 2011, when prices climbed 4.5 percent. [Click here for more]
 
Big Money Funds Invest in Single-Family Homes After Coronavirus Bailout While Biden Plans to Build 2 Million Homes and Apartments
President Joe Biden has revealed a $2.25 trillion dollar infrastructure proposal to build two million homes and apartments while big money funds are quickly scooping up nearly all available single-family homes. According to the Hill, Biden’s proposal to build such housing “would spend four times the entire Department of Housing and Urban Development’s 2020 budget on a range of programs meant to fight a housing shortage exacerbated by the pandemic.” [Click here for more]
 
Mexico Tells Biden: Expect ‘Constant and Growing’ Migration
More migrants are coming to the United States, and the solution is more U.S. foreign aid to Central America, says Mexico’s foreign minister. “If you look at the region from different points of view, but especially demographics and economics, it is clear the flows are going to be constant and growing in coming years,” said foreign secretary Marcelo Ebrard, according to an Associated Press April 8 report. [Click here for more]