Many in the economic center and economic right are claiming that the stimulus payments are the cause of the inflation we are seeing now.
One such article is in the latest Economist. It is a rather unusual article for the Economist because it doesn’t include any graphs.
What if we actually do some basic graphing and try to look at the data, taking samples in January 2021, June 2021, January 2022, and the latest report.
Inflation seems to start to take off after January 2021.
Seasonally adjusted changes from
preceding month
Un-
adjusted
12-mos.
Dec. Jan. Feb. Mar. Apr. May June ended
2020 2021 2021 2021 2021 2021 2021 June
2021
All items.................. .2 .3 .4 .6 .8 .6 .9 5.4
Food...................... .3 .1 .2 .1 .4 .4 .8 2.4
Food at home............. .3 -.1 .3 .1 .4 .4 .8 .9
Food away from home (1).. .4 .3 .1 .1 .3 .6 .7 4.2
Energy.................... 2.6 3.5 3.9 5.0 -.1 .0 1.5 24.5
Energy commodities....... 5.1 7.3 6.6 8.9 -1.4 -.6 2.6 44.2
Gasoline (all types).... 5.2 7.4 6.4 9.1 -1.4 -.7 2.5 45.1
Fuel oil (1)............ 10.2 5.4 9.9 3.2 -3.2 2.1 2.9 44.5
Energy services.......... .2 -.3 .9 .6 1.5 .7 .2 6.3
Electricity............. .4 -.2 .7 .0 1.2 .3 -.3 3.8
Utility (piped) gas
service.............. -.4 -.4 1.6 2.5 2.4 1.7 1.7 15.6
All items less food and
energy................. .0 .0 .1 .3 .9 .7 .9 4.5
Commodities less food and
energy commodities.... .1 .1 -.2 .1 2.0 1.8 2.2 8.7
New vehicles............ .4 -.5 .0 .0 .5 1.6 2.0 5.3
Used cars and trucks.... -.9 -.9 -.9 .5 10.0 7.3 10.5 45.2
Apparel................. .9 2.2 -.7 -.3 .3 1.2 .7 4.9
Medical care
commodities (1)...... -.2 -.1 -.7 .1 .6 .0 -.4 -2.2
Services less energy
services.............. .0 .0 .2 .4 .5 .4 .4 3.1
Shelter................. .1 .1 .2 .3 .4 .3 .5 2.6
Transportation services -.6 -.3 -.1 1.8 2.9 1.5 1.5 10.4
Medical care services... -.1 .5 .5 .1 .0 -.1 .0 1.0
Source: BLS
So from this data, we can see that inflation ending June 2021 peaked at 5.4%. The increase in prices was concentrated in energy and used cars and trucks.
Did people end up spending most of their stimulus checks on used cars and trucks? It doesn’t seem to be the case.
We see that there was an uptick in inflation for commodities less food and energy commodities, but by itself, it doesn’t explain the higher inflation rate, and its increase seems to be from inflation in the used car market.
The culprit of inflation in 2021 is clearly an increase in the price of fossil fuels.
| Seasonally adjusted changes from preceding month | Un- adjusted 12-mos. ended Aug. 2022 |
|||||||
|---|---|---|---|---|---|---|---|---|
| Feb. 2022 |
Mar. 2022 |
Apr. 2022 |
May 2022 |
Jun. 2022 |
Jul. 2022 |
Aug. 2022 |
||
|
All items |
0.8 | 1.2 | 0.3 | 1.0 | 1.3 | 0.0 | 0.1 | 8.3 |
|
Food |
1.0 | 1.0 | 0.9 | 1.2 | 1.0 | 1.1 | 0.8 | 11.4 |
|
Food at home |
1.4 | 1.5 | 1.0 | 1.4 | 1.0 | 1.3 | 0.7 | 13.5 |
|
Food away from home(1) |
0.4 | 0.3 | 0.6 | 0.7 | 0.9 | 0.7 | 0.9 | 8.0 |
|
Energy |
3.5 | 11.0 | -2.7 | 3.9 | 7.5 | -4.6 | -5.0 | 23.8 |
|
Energy commodities |
6.7 | 18.1 | -5.4 | 4.5 | 10.4 | -7.6 | -10.1 | 27.1 |
|
Gasoline (all types) |
6.6 | 18.3 | -6.1 | 4.1 | 11.2 | -7.7 | -10.6 | 25.6 |
|
Fuel oil(1) |
7.7 | 22.3 | 2.7 | 16.9 | -1.2 | -11.0 | -5.9 | 68.8 |
|
Energy services |
-0.4 | 1.8 | 1.3 | 3.0 | 3.5 | 0.1 | 2.1 | 19.8 |
|
Electricity |
-1.1 | 2.2 | 0.7 | 1.3 | 1.7 | 1.6 | 1.5 | 15.8 |
|
Utility (piped) gas service |
1.5 | 0.6 | 3.1 | 8.0 | 8.2 | -3.6 | 3.5 | 33.0 |
|
All items less food and energy |
0.5 | 0.3 | 0.6 | 0.6 | 0.7 | 0.3 | 0.6 | 6.3 |
|
Commodities less food and energy commodities |
0.4 | -0.4 | 0.2 | 0.7 | 0.8 | 0.2 | 0.5 | 7.1 |
|
New vehicles |
0.3 | 0.2 | 1.1 | 1.0 | 0.7 | 0.6 | 0.8 | 10.1 |
|
Used cars and trucks |
-0.2 | -3.8 | -0.4 | 1.8 | 1.6 | -0.4 | -0.1 | 7.8 |
|
Apparel |
0.7 | 0.6 | -0.8 | 0.7 | 0.8 | -0.1 | 0.2 | 5.1 |
|
Medical care commodities(1) |
0.3 | 0.2 | 0.1 | 0.3 | 0.4 | 0.6 | 0.2 | 4.1 |
|
Services less energy services |
0.5 | 0.6 | 0.7 | 0.6 | 0.7 | 0.4 | 0.6 | 6.1 |
|
Shelter |
0.5 | 0.5 | 0.5 | 0.6 | 0.6 | 0.5 | 0.7 | 6.2 |
|
Transportation services |
1.4 | 2.0 | 3.1 | 1.3 | 2.1 | -0.5 | 0.5 | 11.3 |
|
Medical care services |
0.1 | 0.6 | 0.5 | 0.4 | 0.7 | 0.4 | 0.8 | 5.6 |
Source: BLS
This data from the latest report (for August, September hasn’t been released yet) shows that energy has increased by 23.8% over the last year. Other items have increased in prices as well, but the bulk of our inflation woes comes from the increase in energy prices, and this has been true for two years now.
So unless if Americans simply took their stimulus checks and then just bought a ton of oil (which again, no one is reporting) it appears that the issue is from increase oil prices GLOBALLY.
Plus, the inflation rate has lasted for several years, as oil prices have continued to be high, not just in the United States, but also around the world.
The inflation rate is probably not from just the stimulus checks. It is due to our dependence on oil. It’s right there in the data. This global increase in the price of oil is also occuring as America produces more oil than it consumes.
Increasing domestic oil production will not save us from inflation.
Only moving to a diversified renewable energy system which is not only dependent on fossil fuels will save us from inflation rates like we have been seeing.
It is not from stimulus checks.