America's Talking - Increase in Food Costs Drives Rise in Inflation

Episode Date: December 14, 2024

(The Center Square) – Newly released inflation data shows a rise in producer prices. The U.S. Bureau of Labor Statistics on Thursday released its Producer Price index, a key marker of inflation, which rose 0.4% in November. The November increase is part of a 3% increase in the past year, which BLS pointed out is “the largest rise since moving up 4.7% for the 12 months ended February 2023.” Much of the PPI was driven by a rise in food prices, most notably the cost of eggs. “A quarter of the November rise in prices for final demand goods is attributable to a 54.6-percent jump in the index for chicken eggs,” BLS said. “Prices for fresh and dry vegetables, fresh fruits and melons, processed poultry, non-electronic cigarettes, and residential electric power also increased.” Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hello and welcome to America in Focus, powered by the Center Square. I'm Dan McAulb, chief content officer at Franklin News Foundation, publisher of the Center Square Newswire Service. There have been mixed signals on the state of the U.S. economy. This past week, inflation remains frustratingly elevated. The national debt and budget deficit under the Biden administration continue to surge. But optimism that the economy will improve under President-elect Donald Trump is rising, particularly among the business community. Joining me to discuss this today is Casey Harper, Washington, D.C. Bureau Chief for the Center Square.

Casey, where do you want to start? We can start with the deficit. I think that is a good launching off point here. The deficit is soaring as President Biden heads out the door. I mean, I've been covering the deficit for years now. And, you know, people may not know or may not remember that before the COVID-19 pandemic, the deficit never topped one trillion dollars. And of course, the deficit is how much money we borrow in one fiscal year. The national debt has continued to rise, rise, rise. We're over $36 trillion now. I mean, we're hitting these landmarks. We'll probably be at 37 trillion just, you know, before this time next year and say that. We'll be on our way to $38 trillion probably or maybe past it by this time next year. So, I mean, the national debt's rising at a rapid pace. Now, the deficit, like a said was never above a trillion. Now it's regularly over a trillion. It doesn't drop below a trillion

dollars. Last fiscal year, the deficit was $1.8 trillion. Okay. So, $1.8 trillion deficit last fiscal year under Biden. So you might say, okay, this fiscal year, how are we doing? Well, this fiscal year, the deficit is rising about 40% faster than it was the same time last year. All right. So as Biden's heading out the door. Some of this is because, you know, some of his spending was kind of pushed beyond the election, but right now the deficit is rising faster than it was this time last year. And so Trump's got a big problem on his hands that he has to address some way. I mean, he didn't run really on cutting the deficit at all. He's talking about, you know, tax cuts. He argues tax cuts will pay for themselves with increased growth. I understand that argument.

But the deficit's out of control now. So what does that mean for the economy? economy. Well, there's a few markers which you reference. One, inflation is up that's driven, not entirely, but at least partially by that federal debt spending that we just talked about, those high deficits. And the deficits have been so high for so many years in a row, you know, inflation is up. Of course, inflation during COVID and after COVID was that record, just crazy levels, you know, almost 9% at times. And it got back down to more manageable levels that points this year. But it's speeding up here at the end of the year. But it's speeding up here at the end of the year. Producer prices in particular, Dan, are being driven by higher food costs. And so I think

this is interesting, just even throwing it back to you. We always cover the taxpayer angle. And I want to talk about gas prices and small business optimism in a minute. But just starting it back to you, the, you know, you can say the stock market's doing good and, you know, GDP looks good. But when inflation is being driven by higher cost of pork, beef, and eggs, you know, how much is the average American, really experiencing this quote unquote better economy. Yeah, and of course, that's the first thing consumers, American consumers notice when they go to the grocery store. How come meat is so expensive?

How come the price of eggs are so expensive? That's the first thing they notice because they pay directly for it when they check out. It costs Americans more. And of course, inflation, while it remains elevated, It's not what it was like two years ago when we were seeing 40-year high inflationary costs, but those costs never came down. So the inflation we're getting now, the 3% cost increase year over year, that's on top of the 20 plus percent cost increases that we saw when inflation was increasingly elevated.

But let's turn now, Casey, to this optimism in the company, in the economy. there have been a couple of surveys that have been released in the last week or so that show that businesses are more confident that the economy will improve. Tell us about that. Yeah, surveys from the National Federation of Independent Businesses. They keep track of how small business owners are feeling about the economy, how optimistic they feel. And their optimism has been pretty low in recent years, to be honest.

It's been consistently low. It's had ups and downs at different times. but this is the first survey since Trump and Republicans won. And so it's interesting to see, okay, how do these business leaders feel that the results of this election is going to impact the economy? And really, there was a huge spike in optimism among small business leaders that Trump is going to, you know, make changes that help the economy. Of course, small business owners have meant through a lot, Dan. I mean, of course, they were through these four shutdowns of the pandemic, which now we know, it's kind of unclear how much those even helped. but they hurt a lot of small businesses in particular.

You know, big businesses have access to loans and capital and savings that allow them to weather storms like COVID-19. But small businesses don't have that. So many went out of business. So those that survived COVID-19, then they were hit with this crippling inflation. And businesses often, small business in particular, they can't pass on all of those costs to their customers right away because they will lose the customers. They're afraid that, you know, lose their relationship.

relationships and things they have and the business they have if they just spike their prices. So it really cuts into their revenue. So small business leaders have been through a lot these last few years. It's not been the best environment. Of course, regulations have increased pretty significantly under Biden as they usually do when Democrats are in office, pretty much any president besides when Trump was coming. So Trump's coming in. He's saying he's going to cut regulations.

He's going to cut taxes. I think there could be some reason to be a little concerned about these tariffs, depending on what business you're in because they could affect you as a case-by-case basis. But regardless of all that, small business leaders are seeing the highest optimism levels since June of 2021. So in about three years. And interestingly, Dan, gas prices are also at the lowest level in three years. So we're not back to the low gas prices of the Trump era, the first term. And we're not back to the optimism of that Trump saw in his first term.

term, but some of these markers are already heading in the right direction as Trump prepares to take office. Thank you for joining us today, Casey. Listeners can keep up with this story and more at thecentersquare.com.