Inflation Numbers Are In, And They’re Not Looking Good
- Wholesale prices rose sharply, indicating high inflation levels under Biden.
- Excessive government spending and tariffs are the primary drivers of inflation.
- Significant economic growth is required to counteract inflation, but seems improbable.
Inflation Numbers Are In, And They’re Not Looking Good
The latest inflation numbers are in, and they’re not looking good. The wholesale price index rose 0.7% in February, far exceeding expectations. Tony Katz is joined by Dr. Matt Will, economist at the University of Indianapolis, to break down what this means for our economy.
Dr. Will points out that this increase is significant, especially when you consider the 12-month inflation rate. “Point seven times twelve is eight point four,” he explains. “That gives us the Biden era inflation level.” But what’s driving this inflation? Dr. Will identifies two key factors: government spending and tariffs. “Inflation is caused by more stuff or not enough stuff, but too much cash,” he says. “The government is still spending too much money.”
Tariffs, in particular, are a major contributor to the rising wholesale prices. Dr. Will notes that the Supreme Court’s decision to uphold tariffs has left them in place, and manufacturers are now passing those costs on to retailers. “You and I will eventually see this,” he warns. “They’ll have to give it to the consumer.”
So what can be done to address this situation? Dr. Will suggests that the economy could grow its way out of this problem, but that would require significant growth to compensate for the massive government spending and tariffs. “We could grow ourselves out of this,” he says. “But if we don’t, and my gosh, Tony, the amount of growth that would be required to compensate for the massive amount of government spending in the tariffs… it’s not happening.”
The conversation also touches on the recent developments in Iran and the impact on oil prices. Dr. Will explains that the price of oil is “downwardly sticky,” meaning it takes a long time to come down after a sudden increase. This could lead to higher prices at the pump and potentially even a recession. “We’re there,” Dr. Will says. “We’re there.”
Despite the challenges, Dr. Will acknowledges that President Trump’s actions in foreign policy are having a positive impact on the economy. However, he emphasizes that economics is a separate issue from politics. “This is not economics,” he says. “This is Matt, regular citizen guy.” Dr. Will’s advice to the President is to eliminate tariffs and cut government spending, but he’s skeptical that this will happen.
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