Are any of you not seeing empty shelves at your groceries and pharmacies?
When I last wrote about supply-chain problems and inflation, some readers accused me of being an alarmist because they said shelves were full where they shopped.
Of course, they dismissed the fact that I had pictures of empty shelves to prove the problem exists. They also ignored that the hashtag #BareShelvesBiden has trended on Twitter. Sure, conservatives promoted the hashtag, but the pictures of empty shelves at every kind of grocery store, from the major supermarket chains to Target and mom-and-pop shops, didn’t come out of nowhere. And TV stations across the country have filled the airwaves with stories about shortages.
Still, I was surprised when, a month after my supply chain/inflation piece was published, I walked into my local CVS pharmacy and saw lots of empty shelves (you can see some in the picture above and in other photos throughout this article).
To be clear, I am not saying Americans are deprived of consumer goods. The U.S. continues to be the envy of the world when it comes to availability of food, beverages, medicines, and just about anything else you’d want to buy.
I'm just saying that things are not what we are used to. I'm certainly not suffering because I couldn't find bottles of Coke Zero at my local Publix and had to buy cans. However, the reality is that every time I go to a supermarket, I can’t find things on my grocery list. That almost never happened before COVID.
I’m also saying that, from a political standpoint, it doesn’t matter what’s causing the problem. President Biden and his administration are getting blamed for the supply-chain crisis and for inflation that has hit levels the country hasn’t seen since 1982 (details below). They finally seem to be getting the message.
How Bad Is It?
Just so you don’t need to take my word for it, analysis from Federal Reserve Bank of New York economists supports my anecdotal experience. Their review, published in the Liberty Street Economics blog, indicates that the U.S. is probably past the worst of the supply-chain crisis, but that “global supply chain pressures, while still historically high, have peaked and might start to moderate somewhat going forward.” Their position is supported by predictions from economists at other financial institutions who believe a full supply-chain recovery will take months, at best.
The supply-chain problem is only one leg of the economic beast that threatens the Democrats’ hold on Congress as the midterm elections near.
The other, of course, is inflation. Last week, the producer price index, which measures wholesale prices, jumped a near-record 9.7% over the same time last year. A week before, the consumer price index, which measures the costs of many common goods, surged to an annualized 7.5%, the highest since February, 1982.
These aren’t abstract numbers. People are shocked at the prices they are paying for everything to food staples to gas and cars.
When I posted the following picture of a gas station in Los Angeles on Facebook in December, some readers even suggested I had faked it, while others argued it exaggerated reality.
Now, all you have to do is a Google search and you will find dozens of examples of higher gas prices in L.A.
Often forgotten is that inflation takes a disproportionate toll on retirees, who vote in far higher numbers than any other demographic. Many of them depend on social security and pensions, which either don’t rise with inflation, or rise more slowly. So, retirees are already seeing their purchasing power decrease. Other retirees worry inflation might lead to them outliving their savings.
Biden himself had a “mission accomplished” moment, in premature remarks just before Christmas on Dec. 22, 2021. “The much-predicted crisis didn’t occur,” Biden said. “Packages are moving. Gifts are being delivered. Shelves are not empty.”
As recently as Thursday, Feb. 10, Biden continued to deflect blame. He even snapped at NBC’s Lester Holt, calling him a “wise guy” when the anchor noted the fact that the president had been wrong about inflation.
Biden went on to argue that “The reason for inflation is the supply chains were cut off.” Even Steven Rattner, a former Obama economic advisor, wrote in The New York Times that Biden was being “dishonest” and “simplistic and misleading.”
How Are Americans Reacting?
The University of Michigan’s Sentiment Index, which measures consumer confidence in the U.S., plunged from 67.2% in January to 61.7% in February, the lowest since 2011. The problem is far from a one-month blip. The Sentiment Index was at 76.8% in February of 2021.
The reality is that Americans are focused on the bare shelves and high inflation. despite the fact that there's lots of very good economic news.
The labor market has recovered from the pandemic far more quickly than predicted, with the unemployment rate at 4.0%, not much higher than the pre-pandemic low of 3.5%.
The broader U.S. economy boomed in 2021, with GDP growing by 5.7%, the fastest full-year growth since 1984, according to the Bureau of Economic Analysis.
Wage growth, which had lagged throughout much of this century, jumped last year by 4.7%, according to the Labor Department.
To address inflation and the possibility of an overheated economy, the Federal Reserve has said that interest rate hikes are coming. For individual Americans, that will mean more economic pain, in the form of more expensive mortgages and credit card debt. Rising rates and the uncertainty caused by what the White House calls Russian President Vladimir Putin’s "invasion" of Ukraine have triggered sharp drops in American equity markets, which had been near all-time highs.
What Does This Mean Politically?
Inflation is the most urgent issue facing the country today, above immigration, COVID, and crime. That’s according to a new Quinnipiac University Poll published on Feb. 16, 2022. The survey of registered voters found that 27% chose inflation as the greatest challenge facing the U.S. today, far ahead of second-place immigration (12%).
Quinnipiac also found that 59% of those surveyed said the economy is getting worse, and 61% disapproved of how Biden is handling it. No wonder that Biden’s job approval rating in the poll was sharply underwater by 37%-56%. (Biden is a little less underwater in the RealClearPolitics average of polls, which currently has Biden at 41.4% approval and 52.9% disapproval.)
Biden has changed his message on inflation, shifting from downplaying it to conveying that he feels the pain of American families.
However, with inflation predicted to remain at higher than usual levels through the November elections, it may be too little too late. Historically, the party that holds the presidency has almost always lost seats in Congress, even when presidential approval ratings are much higher than Biden’s.
Finally, if Putin intensifies his aggression against Ukraine and moves into Kyiv, the economic woes could likely worsen sharply, turning Biden and America’s Shakespearean winter of our discontent into “The Tempest.”
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Cover photo: Some bare shelves at a CVS pharmacy in Coconut Grove, Fla., in a picture taken by me on Tuesday, Feb. 14, 2022.