President Barack Obama saved the world from certain economic disaster when he took office. The mega banks gambled and lost big. If Obama had not taken office, we would have gone through a crushing Great Depression with 25 percent unemployment. He left the healthiest U.S. economy in decades, but then Donald Trump came to office.
The current POTUS recently claimed that the U.S. had the lowest unemployment rates in years, which is true. He has ridden the Obama wave of good fortune.
Generally speaking, that means employers should start to raise salaries to entice employees to come work for them. Unfortunately, that is not happening. Plus, there is one big downside to that low unemployment.
The rate of inflation has just shot up faster than it has in the past six years, according to the Department of Labor’s most recent report. High inflation can be caused by supply and demand.
The fewer goods available, the more suppliers can charge for their product. That should hold true for the supply and demand of human beings. The fewer the people, higher their wages should be, but there has been no evidence of that. under Donald Trump.
In fact, over the past year average wages did not increase at all. Real average hourly earnings fell 0.1 percent. Of course, there are exceptions. Ivanka Trump and her husband Justin Kushner earned $82 million last year.
What is inflation, anyway?
If a person needed $1.000 to buy something when Franklin Roosevelt became president in 1933, it cost $7,129 when Ronald Reagan took office in 1981, according to the Department of Labor.
It cost $11,444 when Bill Clinton took office in 1993, $14,100 when George W. Bush took office in 2001, and $16,972 when Barack Obama took office in 2009.
That same item cost $19,272 when Donald Trump took office in 2017, and $19,967 today.
The way to reduce inflation is to slow down the economy by spending less. In other words, reduce the supply of money people have to spend.
Another way to slow down inflation is to increase interest rates on home loans, cars, and credit cards. That is not a pleasant alternative. At this time, the Federal Reserve is not planning to raise the interest rate.
Republicans have implemented the trickle down economics in their so-called tax cut bill. Unfortunately, the highest earners g0t the money, and it did not trickle down.
The consumer price index rose from 0.2 percent between April 2017 and today. It only rose 2.8 percent all of last year. That is the highest inflation rate since February 2102.
Gas prices spiked 1.7 percent in May. In April, those prices went up a full 3 percent.
Featured Image Getty Images/Saul Loeb.