Not a Democrat. Actually a conservative and former Republican, but I can chime in.
When Trump left office 75% of schools were closed because of the pandemic. Countless businesses as well. A lack of need for goods caused consumer spending to plummet.
Not even Trump’s handouts sparked consumer spending like he hoped, because people were pessimistic about how long it would be before they could go back to work. So they put that money in savings or used it to pay down debt. Low demand leads to lower prices. That’s economics 101.
Then Biden passed his American Rescue Plan. Rather than paying people to stay home and not work like Trump, Biden invested in helping schools and businesses to safely reopen. By the end of 2021, 85% of businesses and 95% of schools that had closed because of the pandemic reopened despite the pandemic actually worsening (we had more Covid deaths in 2021 than 2020, and we closed out 2021 with the highest daily new covid cases since the pandemic began). We also saw a record number of new businesses launch in 2021.
As people went back to work, they started needing goods again. And thanks to the Trump stimulus, extended unemployment benefits, moratoriums, etc., they had money tucked away to spend. This led to the fastest economic recovery in history as Americans spent money faster than any time in history.
The demand for goods and services escalated above even pre-pandemic levels, and we simply lacked the goods to sell. Remember, Trump’s tariffs led to shortages of vital manufacturing components that still persist today.
His ban on imports of things like infant formula led to crisis-level shortages. His deal with OPEC to slash production for two years created a global oil shortage that the world still hasn’t recovered from. A lower supply of goods means higher prices. Again, this is economics 101.
Meanwhile, we saw the largest peacetime drop in unemployment in history, and the competition for workers led to higher wages. That complicated things threefold: first, because people started earning more, they had more money to spend.
Second, because they were being paid more, businesses had to raise prices to offset pay increases. Third, because people were buying more, this taxed our low supply of goods even more. And now the snowball effect begins. People keep spending more and creating more jobs, which gives more people money to spend.
And the more they spend the harder it is to keep up with production, so the less there is to buy. So prices keep rising but people keep spending and that just keeps prices going higher and higher.
So in short, the ultimate cause for the current high inflation is an unprecedented increase in the purchasing power of Americans brought on by the “Biden Boom”, following colossal damage to our supply chain caused by four years of failed economic policies that were exacerbated by a complete failure to properly address the pandemic.
Not a Democrat, but happy to help.
In January 2021 when trump left office, 77,400 Americans died of COVID.
The vaccines were out, but trump didn’t have a distribution plan, saying that was up to the states.
Schools, restaurants, and stores were closed. Few people went away for Xmas. Life was essentially on Pause.
GDP shrank by 3.5%, making it pretty remarkable there was any inflation at all. No demand = no shortages.
Biden came in and immediately went to work putting jabs in arms. Confidence returned, more quickly than anyone expecting. The shutters were lifted, and people began to return to normal life.
Meaning they wanted the stuff they were consuming before the pandemic began. Except COVID didn’t affect just the demand side of the equation, it also slammed supply. Other countries had done some version of what we’d done, meaning lots of stuff didn’t get made or harvested or shipped, and suddenly we had close to the usual level of demand, PLUS a need to build up inventory that had disappeared or rotted during the shutdowns.
For the past few decades businessmen around the globe had been adopting Toyota’s “just in time” approach to supply chains. That saves lots of money (at least for the companies on the buying end) when everything is working normally. But it left everyone standing naked when adult swim ended.
For example, right now in Japan there’s a four-year wait for a new Lexus. Which is made in Japan. But it uses chips made in China, and China is still in lockdown. The same thing is happening in the US; have a look at what it costs to rent a car these days.
None of this should be surprising. You can’t expect the world to stop and then suddenly pick up where it left off. So anyone paying attention would have known that a period of sustained inflation FOR THE WORLD was inevitable.
Then Putin, Ukraine, wheat shortage, etc.
I can hear you asking, “Isn’t it Joe Biden’s job to deal with all of that?” It is, and if you look at the US inflation rate compared with, say, the UK (10.4% headed for a forecast 18%), you’d have to conclude he’s outperforming his peer group.
None of this is to suggest the current inflation isn’t anything other than tremendously painful. And it’s made worse by companies seeing an opportunity to jack up prices under cover of widespread inflation.
But the one thing it’s not is surprising. The same thing would have happened to trump if he hadn’t lost.
Last point, and again, I am NOT a Democrat:
If the Republicans have a better idea for how to handle the current nightmare, let’s hear it. I’ve heard endless criticism of Biden, but only for not giving everyone a bike for Xmas. I can’t think of a single GOP leader who has said, “He should stop doing X, and start doing Y.”
