Child Poverty, Inflation, & More
Week in Review: Sep. 11-15
Impeachment proceedings, a UAW strike against each of the Big Three, and an injury to Ravens’ running back JK Dobbins dominated the headlines this week. While the news is by definition new, some things haven’t changed, including the lingering focus on inflation.
When you read that inflation is falling, or slowing, or cooling, it doesn’t mean that prices are falling. It means that prices are rising at a slower pace than they were.
That common misunderstanding probably explains the gulf between economists’ view of inflation—It’s slowing down!—to regular peoples’ view of inflation—These prices are still too damn high!
Sadly, the toothpaste is out of the tube. Prices are up about 17% since the start of 2021 and aren’t going back down (it would be a different, bigger problem if they did). Best we can hope for now is that prices go back to increasing at a slower rate.
Anyway, big week for economic data releases, with disturbing news on child poverty (Tuesday), updated measures of inflation (Wednesday and Thursday) and retail sales (Thursday), a new consumer sentiment reading (Friday), and more.
As a final note, please take the Sage Economics Survey (if you haven’t already), and many thanks to the 330+ of you who already have.
Gas prices inched slightly higher after two weekly declines but are still about $0.02 cheaper than one month ago. While gas prices are pretty tame nationwide, the Corn Belt saw a sharp spike last week, with prices rising sharply due to a refinery outage that’s also pushed gas prices higher in some west coast states.
Diesel prices increased for an eighth consecutive week, up about $0.05/gallon, and are now at their highest level since the end of January.
TSA Checkpoint Travel Numbers
After a record-breaking Labor Day weekend, the number of people passing through TSA security slipped back below 2019 levels over the past week (by less than 1.0%). Given that 12.1 million people flew over the holiday weekend, it makes sense that there’d be a lull in travel this week. With spending likely to slow over the next few months, this is an indicator that bears close watching. Also, your valuables bear watching as they pass through Miami’s airport.
NFIB Small Business Optimism Index
Small business owner optimism declined in August and remains below average for the 20th straight month. About one in four small business owners listed inflation as their biggest problem. While these owners are probably a little too pessimistic, it checks out that small businesses have a tougher time with inflation than larger businesses do (mostly due to economies of scale or lack thereof).
Poverty in the United States: 2022
The Census Bureau released new data on poverty, and they are not upbeat. The big, awful headline is that the child poverty rate more than doubled, surging from 5.2% in 2021 (the lowest level on record) to 12.4% in 2022. This is the largest yearly increase on record, yet still a lower child poverty rate than in 2019 or any earlier year.
Why? The American Rescue Plan temporarily beefed up the child tax credit in 2021, but those additional benefits fell off in 2022. As far as evidence of effective (but expensive) policy, I’m not sure it gets much better than this.