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Construction Materials at 75% Inflation

Posted November 10, 2021

Jeffrey Tucker

Last night I did my usual grocery run. I don’t shop at stores with philosophies. I go for the el cheapo places that don’t have olive bars and don’t play Schubert on the intercom. I just want the stuff I need at the lowest possible price. Even I was stunned at the 40% increase in my usual bill. I thought I was buying in a minimalist way.

Later I looked more carefully at what went wrong. I bought beef and bacon. Beef price increases are now at double digit rates, and bacon too is headed that way. You are paying $1.50 more per pound than one year ago. Pork and chicken are less, but that could change. Turkeys are in short supply for Thanksgiving. It will be the most expensive Thanksgiving meal in our lifetimes.

Stores don’t tag groceries based on the percentage increase in the price. That you have to remember from last week and last month. Indeed, stores have every reason to disguise this. Manufacturers too, which is why packaging these days is holding ever less product. This is called shrinkflation. It is an epidemic right now, as manufacturers are struggling to survive huge increases in their own costs.

The Consumer Price Index comes out this week, and it is guaranteed to alarm. The Producer Price Index was bad enough. It shook nearly every reporter, but hardly anyone looked at the details. Let’s have a look at the year-over-year percent change in the index for construction materials. It’s up 75%. This is a chart I never thought I would see in my lifetime.

Producer Price Index by Commodity: Special Indexes

Now let’s look at gasoline. You experience it daily, the high prices at the pump. Last year at this time, the average price per gallon was $1.81. Now it is $3.40. It is also rising as demand intensifies and supply faces restrictions. Most importantly here are the monetary effects as so much money sloshing around that The Fed pumped up in the last 20 months reduces the value of the unit compared with what it can buy. This inflation will never hit all products and all sectors evenly. It moves from sector to sector. These days the toxin is moving so fast and in so many directions it makes one’s head spin.

We keep hoping each month to get good news. Perhaps The Fed will prove correct that it is only transitory. Sadly, that is not the case. They have been way off in their predictions. The producer price index is the one to watch because these price increases get passed on to consumer prices as inventory is depleted.

Clothing is a case in point. We are already facing high prices and shortages on the shelves. This is driving people to the thrift stores. The major headlines are starting to write about this. Thrift store prices too are on the increase, as I predicted last month.

The percent change in the producer prices that go into making polyester clothing is now up 23.6%.

Producer Price Index by COmmodity: Textile Products and Apparel

Even if monetary policy is fixed, even if supply chains are repaired, even if the clogs at the dock are unclogged, it will be months before this figures into consumer prices. Sadly, there is almost no chance that any of these good changes happen, meaning that these higher and higher prices are here to stay.

A Broken State

As we’ve mentioned before, there is something about American political culture that is especially averse to inflation. People frankly hate it, especially since we’ve lived 40-plus years without inflation being a particularly pressing problem. Now looking at price trends creates shock and even hatred. It is hitting the Biden administration particularly hard.

A USA Today poll shows that Biden’s approval has sunk to 38%. The trend line here is truly devastating. We can speculate why. Inflation plays a role. But also the vaccine mandate seems to have hit the Biden approval rating very hard. In the coming month, millions of jobs could be affected by this. The protests are growing in every city, and the people protesting are union members, city employees, and even tech workers. They are furious that government would presume the right to tell people what medicines they must inject into their bodies.

Some of the protestors are themselves vaccinated against their will. They are bitter and angry about it. The news of adverse outcomes from vaccination is leaking out, through family networks and through alternative news venues, though it continues to be suppressed by the media. So this mandate is now being seen as a direct threat to individual health. That’s something that will inspire people to take to the streets.

The 5th circuit court of appeals has issued a stay against OSHA’s mandate on business. The Biden administration attempted a response, but the result was lame. It just said that it stands by the mandate on health grounds, period. Perhaps this won’t surprise you but the president himself instructed business to go ahead and proceed, essentially advocating that they ignore the court ruling.

In other words, the Biden administration has gone completely lawless, not just ignoring the US Constitution but also advocating that businesses ignore the courts. That’s dangerously close to announcing that we now live with dictatorship.

It’s no wonder that even Senator Ted Cruz of Texas is even talking about secession from the union. If he is saying this, I truly cannot imagine the kind of anger there is among the citizens.

Coming for the Kids

To top it off, making all the above much worse, the vaccination is now coming for the kids. Mandates will surely follow. You want revolution in this country? This is a good way to foment one. The current regime has another year of unchecked power. It seems unfathomable. So far, they have not been deterred by anything, not the courts, not public opinion, not even sinking election prospects.

The U.S. has become a powder keg.

Regards,

Jeffrey Tucker

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