MUNCIE, Ind. — The economy is in a peculiar position as the post-pandemic recovery continues to move forward.
You may have noticed that the prices of some of the things you regularly buy have gone up. Ball State University economist Mike Hicks said it varies by product on whether or not prices have gone up because of the regular ebb and flow of the market, or if it’s a result of inflation.
“Inflation is caused by an excess supply of money in the economy,” said Hicks to Indy Politics. “We don’t see evidence of broad price changes and that’s really the signal of inflation. So, at the same time, we are seeing individual prices of products going up. Some products are cheaper.”
Part of the problem with inflation right now is directly correlated with the labor shortage, said Hicks. With consumer demand moving back up quicker than most experts predicted, the labor market has not kept up with the return of consumer demand post-pandemic.
“So, we are still down about five and a half, six million people who should be working,” Hicks said. “That’s truck drivers, people who stock grocery shelves, people who unload container ships.”
This then feeds into the supply chain issues that the country is dealing with. Right now there is a backlog of container ships on the west coast that are waiting to be unloaded. As a result, ports in Los Angeles and Long beach are running around the clock.
You’re also seeing the effects of inflation at the gas pump. Hicks said we are still a long way off from what we saw in 2008 when gas prices were hitting $4.00 a gallon rather routinely. You may remember that earlier this year gas prices were down below $2.00 a gallon at one point.
“The United States is now an oil-exporting nation,” said Hicks. “What we did when gas prices plummeted we capped wells. So, when you cap wells you stop pumping oil. To get those started back up over the summer (to meet demand) you have to hire people, you have to get them out to these man-camps and train them. It’s just not a smooth and easy adjustment.”
Again, Hicks said it partly goes back to the labor shortage. He said it’s hard to tell if relief from inflation will come soon.
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