At Marginal Revolution, blogger Alex Tabarrok writes: “I wish Arnold Kling were correct that inflation is around the corner. We could use some inflation to get back on track. ”
Yes, I know CPI shows virtually no inflation, mainly because food and shelter prices have been declining during the past year. But in the past few weeks agricultural prices have begun headed higher. This has yet to show up in CPI, but it will soon. And even the housing market is showing strong signs of life as we’ve documented here in numerous posts. Moreover, scratch beneath the surface, and you find plenty of signs of inflation outside of those two sectors:
- Car rental prices are up nearly 50 percent in the past year,
- small businesses are seeing their health insurance premiums rise by about 15 percent for the coming year.
- CalPERS is going to raise long-term care insurance premiums between 15 and 25 percent.
- Many companies are reporting that they have raised the prices of their products.
- The bond market is signaling the highest inflationary expectations in more than a year.
- Gas prices at the pump are increasing.
- 44 percent of companies that recently implemented pay cuts have rescinded them.
- Airlines are raising fares and instituting all manner of annoying fees.
- Cities are raising sewer fees and water fees.
- New cars and used cars are getting more expensive.
- College tuition costs increased 6.5 percent this fall.
- The price of gold is at an all-time high.
That’s just a partial list of recent items covered at Inflation Watch since we started this blog just over a month ago.
After reviewing the links supplied above, does Mr. Tabarrok still think what the economy needs is more inflation?
Update: Matthew Yglesias agrees with Tabarrok. Bipartisan consensus!
Dr. Duru