Published on September 17, 2021
August’s inflation report was heralded as a sign that rising prices are slowing down. If only that were true.
People so want to believe that inflation is temporary that they will seize on any good news as a silver lining. That’s what happened this week when the monthly consumer price index data was announced. The “core CPI,” which excludes prices from the food and energy sectors, rose at 0.1 percent, while the full index rose at 0.3 percent. Both rates were lower than the previous month, leading to reports saying that inflation has peaked and the worst was over.
That’s highly unlikely to be true. Americans are sitting on trillions of dollars of savings they accrued during the pandemic, largely because of the stimulus checks that were sent to people regardless of their need. Personal income is also much higher today than it was before the pandemic, despite the fact that millions are still without work. That’s because the federal government continues to give trillions of dollars a year to people who never lost their jobs or saw their wages cut. The increased child tax credit, something almost all Americans with young children now get monthly, is just one example of how people who have made it through the pandemic relatively unscathed economically have money to spend they never had before.
Henry Olsen is a Washington Post columnist and a senior fellow at the Ethics and Public Policy Center.