Inflation is up, and Americans are mad. But it’s not a simple story.
Paul Krugman, the economist and Times Opinion columnist, asked an intriguing question last week: Why are Americans so upset about inflation?
Inflation usually creates some dissatisfaction, of course. When price increases exceed wage increases, it means that the effective pay of most families is falling. That has happened in the U.S. over the past year.
It’s partly a reflection of rising inflation around the world. Prices have increased because Covid-19 disruptions have reduced the supply of many goods while government stimulus programs have put extra money into families’ bank accounts. More demand plus less supply equals higher prices.
But inflation is especially high in the U.S. The main reason is probably that this country spent more money on pandemic stimulus than many other countries. A second reason is that daily life here remains more disrupted than in much of Europe or Asia.
Inflation since the start of the pandemic
Consumer Price Index
Yet even with the highest inflation rate since the 1980s, the U.S. economy is functioning pretty well in other ways. Work is so plentiful that many people are quitting their jobs for better ones. Thanks to the stimulus money and rising home values and stock prices, most families are better off financially than when the pandemic began. Child poverty has plummeted. Lifesaving vaccine shots are universally available.
As Krugman noted, an inflation rate that exceeds wage growth does not automatically make Americans grumpy. In both 1984 and 1988, when Republicans held the White House, inflation was also eating up wage gains. “Yet, Republicans won both elections by large margins by running on the economy,” Krugman noted. They were able to do so because economic confidence was high.
Today, it is not:
Share of Americans who rate U.S. economic conditions as excellent or good
Krugman suggests that the main reason is a national narrative, coming mostly from the media, that focuses on inflation and ignores the economy’s strengths. And I don’t doubt that this negative narrative plays a role in the country’s dissatisfaction. As regular Morning readers know, I agree that we in the media have a bad-news bias.
But I would be surprised if a media narrative were the full story. What else might explain the dissatisfaction? Even if you forget about inflation, the experience of living and working in the U.S. economy is often unpleasant right now.
Among the problems: Public buses and subways are unreliable, mostly because of Covid absences, lengthening commutes. School buses and after-school activities are unreliable, creating child-care gaps. Grocery stores are routinely out of items. Retail lines are long. Doctor’s appointments can be hard to get.
A tough problem
In coming months, inflation is likely to decline. Much of the pandemic stimulus is expiring, and the Federal Reserve will be raising interest rates, as several top officials emphasized yesterday. The Biden administration is also taking steps to increase the supply of goods. It has encouraged ports to remain open and tried to increase the pool of truck drivers, by expanding apprenticeships and reducing licensing wait times.
“We are working aggressively with the private sector to increase throughput in the ports, and we’re posting real results,” Jared Bernstein, a member of the President Biden’s Council of Economic Advisers, told me. “A key part of that is our trucking action plan, to improve the quality and quantity of those jobs.”
Still, it remains unclear how far inflation will decline this year. “It’s a very difficult problem for them to address,” my colleague Ana Swanson, who covers economic policy, said. Some economists have pointed out that inflation is now so high that it could decline in coming months while remaining uncomfortably high.
Ultimately, I think it makes sense to think of inflation not as a narrow economic problem but as part of something larger. American life remains highly abnormal because of the pandemic’s disruption to daily life. By many measures — mental health, suicide attempts, blood pressure, violent crime, vehicle crashes, student learning — society is not functioning very well. An inflation rate high enough to shrink paychecks is another item on that list, and hardly the most important one.
No wonder most Americans have grown frustrated, including with Biden. People’s living standards and even physical well-being are suffering. A disproportionate toll is falling on low-income families and children.
In a Monmouth University poll released yesterday, 70 percent of Americans said they agreed with the statement, “It’s time we accept that Covid is here to stay, and we just need to get on with our lives.” A growing number of governors, from both parties, seem to agree, The Times reports. “The emergency is over,” Colorado Gov. Jared Polis, a Democrat, has said.
But none of this means that there are easy answers, at least not until cases have fallen well below their current level. About 2,500 Americans are still dying of Covid every day, mostly — but not entirely — because of the large remaining number of unvaccinated Americans.
Pretending that Covid has disappeared has costs, to people’s livelihoods, happiness and physical well-being. And allowing Covid to continue dominating everyday life has costs, to people’s livelihoods, happiness and physical well-being. The only realistic option is to balance the two and look for a path that minimizes the human damage.
Related: On the “Sway” podcast, Polis explains his Covid approach to Kara Swisher.
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The F.D.A. granted full approval to the Moderna vaccine. It will be marketed as Spikevax.
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Pfizer is planning to ask the F.D.A. to authorize its vaccine for children under 5.
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A report into accusations of lockdown-busting parties at the British prime minister’s office has deepened a crisis for Boris Johnson.
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Italy, with its high vaccination rate, shows a new divide: risk takers vs. the risk averse.
Politics
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Donald Trump was more directly involved than known in exploring proposals to have national security agencies seize voting machines, accounts show.
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Trump’s political operation reported having $122 million in the bank, more than double the cash on hand of the Republican National Committee.
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The E.P.A. will resume enforcing mercury pollution limits, rules the Trump administration weakened.
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Ron DeSantis, Florida’s governor, has emerged as a presidential contender by battling mainstream media.
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A prosecutor dropped the last criminal inquiry into sexual misconduct allegations against Andrew Cuomo.
Other Big Stories
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A federal judge rejected a plea deal on hate-crimes charges in the killing of Ahmaud Arbery.
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Top U.S. and Russian diplomats will meet today, after yesterday’s hostile open session of the U.N. Security Council. And Vladimir Putin will host Hungary’s leader.
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Myanmar remains mired in conflict and chaos one year after a military coup.
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A famed coach was barred from track and field for life over sexual assault allegations.
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Rachel Maddow plans to go on hiatus to work on a podcast and a film.
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Sony bought the game maker Bungie in the latest consolidation in the industry.
Opinions
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ARTS AND IDEAS
The sound of romance
Dating shows have been a television staple for decades, from the 1965 premiere of “The Dating Game” to “The Bachelor” and its spinoffs. Now, two podcasts — “This Is Dating” and “It’s Nice to Hear You” — are reimagining the matchmaking format for audio, Reggie Ugwu writes in The Times.
“This Is Dating” follows four people looking for love. A dating coach guides them, and producers select candidates based on the dater’s preferences. Listeners follow the four on multiple first dates, conducted over Zoom. (The contestants use real voices and fake names.) The effect is something like eavesdropping.
“It’s Nice to Hear You” takes cues from shows like “The Dating Game” in which contestants get to know their prospective partners without seeing them. It follows three couples who correspond once a day for 30 days via voice memo, without exchanging photos or other identifying details. “You’re not being distracted by what someone looks like or what’s in their background,” Heather Li, the show’s creator, said. “I think it’s harder to prejudge someone if you don’t have as many data points.”
For more: Read Caity Weaver on why viewers love dating shows where contestants can’t see each other.
PLAY, WATCH, EAT
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Late Night
The hosts discussed Donald Trump.
Now Time to Play
The pangram from yesterday’s Spelling Bee was talkative. Here is today’s puzzle — or you can play online.
Here’s today’s Mini Crossword, and a clue: Affirmatives (five letters).
If you’re in the mood to play more, find all our games here.
Thanks for spending part of your morning with The Times. See you tomorrow. — David
P.S. The Times bought Wordle, the sudden hit game, for a seven-figure sum.
Here’s today’s front page.
“The Daily” is about inflation. On “The Ezra Klein Show,” Amanda Litman talks about how to get involved in local politics.
Claire Moses, Ian Prasad Philbrick, Ashley Wu and Sanam Yar contributed to The Morning. You can reach the team at themorning@nytimes.com.