INDIANAPOLIS–Things don’t look so rosy, despite what you’re being told by the president, says Dr. Matt Will, economist at the University of Indianapolis. He told WIBC’s Tony Katz Thursday, that a basic understanding of the economy should tell you prices will likely go higher.
He said there are three letters you should learn and remember: PPI. That’s the producer price index, or what the wholesalers are paying for the supplies to make what you buy, and what the stores are paying.
“The producers, the wholesalers, the people who are selling our stuff to us, their inflation is even higher. And, you know when the president talks about when the future looks bright, that’s totally wrong because these producers are going to have to pass those costs along to us,” said Will.
The inflation rate is 9.1 percent. The PPI is 11.3 percent, meaning you’ll eventually be paying more.
Will said that gas prices receding and Amazon’s Prime Day spending are not indicators that the economy is doing better, or that the economy is strong.
“Things fluctuate and you can’t look at the ups and the downs. It goes up and down month to month, day to day. You have to look at the long-term trend and the trend has been up since they said it was transitory a year ago,” said Will. “The Amazon number is an anomaly, unique to Amazon. It’s not reflecting the total economy.”
Amazon claimed to have sold three million items on Prime Day.
Will added that the government’s plan to spend more and tax more will not help ease inflation. He said one misnomer coming from the government is the term “investing”.
“It is not investing. Investing is when you get more back than you put in. That never happens with government spending. There is no investment going on here. That is totally bogus.”
Will said the spending by both the Trump and Biden administrations is what’s driving inflation, with a plan by the current administration to increase spending by 50 percent. He said some proposed taxes will also not ease inflation, and would likely exacerbate the supply chain problems.
“A global minimum tax on corporations. They want to reinstitute the death tax. They want to expand the NIIT which taxes people multiple times along the production process. Does anybody in their right mind think that’s gonna increase the supply by adding those new taxes to corporations and people?”
Will added that he believes we are likely in a recession, with manufacturing orders contracting and not expanding.
But, he does believe the Fed is doing the right thing by increasing interest rates, though he said that’s nine months too late.