America's Talking - Inflation Rose More Than Expected in Latest Federal Data

Episode Date: August 11, 2023

Newly released federal inflation data shows that producer prices rose more than expected. The U.S. Bureau of Labor Statistics released its Producer Price Index, a key indicator of inflation, which showed producer prices rose 0.3% in July and 0.8% over the last 12 months, higher than expected. Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See 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, executive editor of the Center Square Newswire Service. Joining me again today is the Center Square's Washington, D.C. Bureau Chief Casey Harper. How are you, Casey? Doing well, Dan. How are you? I am doing fine. Thank you. It's already the middle of August. We are recording this on Friday, August 11th. Casey, more news this week related to the U.S. economy, federal government spending, continued inflation and how that all impacts businesses and consumers. Why don't we start with inflation, which rose again in July. Give us the details. Yeah, that's right.

Inflation still continues to rise. There's kind of this meme out there. And even in the media, that inflation has stopped. And while it has slowed, it's definitely still increasing in certain areas. It's increasing in pretty fast at hurting Americans' pocketbooks. So the U.S. Bureau of Labor Statistics released their July inflation data, which showed a 0.2% increase for that month. That's part of a 3.2% increase over the last 12 months, which is a little higher than really what economists want for inflation data. You know, they look, you know, it's all broken down by category. The index for shelter was the biggest one. I mean, that's the one that's increased the most. So so don't worry, Dan, inflation doesn't hurt you as long as you don't need a place to live. a 90% increase, right? So it's pretty significant. Motor vehicle insurance. You know, if you don't need car insurance or shelter, you're going to be just fine with the inflation. Of course, food

is rising food prices. And also, you probably notice, Dan, gas prices. I think where you are, gas is like the average is about $4.10 a gallon. Does that sound right to you? Yeah, that is right. I am in the suburbs of Chicago, Illinois, compared to neighbor. We're in midwestern states far and away of the highest gas prices in the Midwest. That has a lot to do with our second highest in the nation gas taxes. But yeah, gas is. It's true. Iowa right next to you is $3.80 a gallon and just right across Illinois.

So to your west, Iowa is 380. To your east, Indiana is 3.76. And right in the middle, this Illinois sandwich is $4.10. sense. Is that AAA gas prices? Where are you getting those? That's right. That's right. Triple A gas prices. And it's even higher. That's the average for Illinois. It's even higher when you get to Chicago and the near suburbs of Chicago. Yes, we're paying quite a bit for gas in the heartland of America. Of course, when you go out West, California and Washington, states like those are even higher. So, yeah, Americans are paying more at the gas pump, paying more at the grocery store, as you mentioned, for food. And somewhat tied to the Federal Reserve's interest rates, housing prices are up significantly. Housing prices are up.

And if you're trying to get a loan, I mean, that interest rate is far higher than what it was just, you know, a year or two ago, up over, I think, five or six percent. once you drive to the gas, once you drive to the grocery store, for example, in the last year, here's some fast facts, and I'll hand it back to you, but flour is up 8.5%, bread is up 9.5%. Pet food, 10.5% increase. Sugar, almost 9%, margarine, over 11% increase. So yes, it's definitely leveled off. It's definitely slowing. But I think, you know, we're always looking, how is this impacting real Americans? And is there something behind the headlines or between, the lines of what the rest of the media is telling you. And I'll just say if your gas prices are up. So, oh, and nationally, gas prices are up in the last month, almost 30 cents. So if gas prices are up,

you know, let's see, a month ago, average is 354. Now it's 384. So if gas prices are up 30 cents in last month, you know, you're buying bread is much more expensive sugar, margarine, some of these basics. Your dog food is much more expensive. You might read that headline that inflation is over and kind of roll your eyes. And so that's what I was trying to get at with some of these numbers. Right. And somewhat related. We talked last week on America and focused Casey about Fitch, one of the three major

international credit rating agencies, downgrading the U.S. credit rating because of spending. Well, we also found out this week, and you reported on the U.S. Congressional Budget Office's new estimates that the federal government is bar. And despite this downgrade because of increased spending by the federal government, which does drive inflation. This is how they're related, is borrowing an average of $5.3 billion, $5.3 billion a day just to operate the federal government. That can't be good. Now, Bill, you said billion as in B, like B as in bankruptcy. Right?

Yeah. Yeah. Yeah. Right. So, I mean, it is pretty incredible. this Fitch story that you reference is huge that, you know, there are three, I think maybe some people don't really know. And this is kind of a, if you're not a banker, you're not in the financial sector, you know, why would you know? But there's three major kind of credit agencies internationally.

And one of them is Fitch ratings, the one we're talking about here. And they lowered the U.S. credit score essentially from a AAA to a double A plus. So it'd be like if your credit score got lowered from an 800 to maybe a 700, right, or 750. It's not, you know, it's not dire in the sense you're not going to be able to buy a car or a house, but it is a really bad sign in the sense that if your credit score got knocked down 100 points, you know, Dan, you or I, or average person might say, oh, I need to kind of rein things in. I need to take stock of my habits. And believe it or not, Congress has not taken a long look in the mirror and said, what can we change? How can we make things better? Because as you said,

$5.3 billion per day, the deficit's about $1.6 trillion just in the first 10 months. I think, you know, such a big number. People don't, maybe don't have context. But before COVID, there were no, like, there was not an over trillion dollar deficit. And now it's just kind of normal to have a one and a half trillion dollar deficit headed towards two in this post-COVID world. So the deficit, you know, that's how much we are over budget for the year. Right. And that's just added on to the debt. I mean, there's other pretty startling statistics. CBO projects that the debt will be nearly twice the size of the U.S. economy in a little over 30 years. Pretty soon, around that same time, our interest payments alone on the national debt are going to be the biggest expense for the federal government, not Medicaid, not Medicare, not defense, but interest payments on the debt. So, you know, trust funds for Social Security, Medicare and highways. are facing insolvency just within the next few years or something is it done. So, you know, all cheery reporting here outside the capital in D.C.

And of course, this related government spending, which leads to inflationary increases, has real world impacts. You wrote a story about a new small business survey that was released this week that shows businesses aren't very optimistic about the state of autonomy. That's right. I mean, small business owners feel these shocks really quickly. They don't have the big budgets or the savings that some of these bigger businesses might have that allows them to absorb economic shocks. So they go out of business. A big company can survive a COVID lockdown. But your small yogurt shop in town, as many of our listeners probably saw, went out of business during those lockdowns. And the same is true for these big economic shocks. So the National Federation of Independent Businesses, they released this survey. which found, you know, they basically ask all these small businesses, how optimistic or pessimistic are you? And the pessimism right now is below the national average, you know, of the last, you know, almost 50 years they've been asking businesses. And for the last 19 months, businesses have been more pessimistic, right?

So there's just this steady pessimism among small businesses. I'm really in COVID and coming out of COVID. So while we have seen some promising numbers like unemployment, as we've been. pretty good. You know, inflation has slowed from small businesses' perspective. Things are still really bad and they're still pretty pessimistic about them. Yeah, not very good news, Casey, but we are out of time. Listeners can keep up with all of these economic stories and how they impact your pocketbook at thecenter square.com for Casey Harper. I'm Dan McAulam. Please subscribe. Thank you for listening.