Inflation

by Tyler Branstetter

Inflation is a word we hear today more than ever. According to the U.S. Bureau of Labor Statistics, people pay on average 13.1% more on the same items than they did in the beginning of 2022. In America right now, there are many causes to our inflation. Some could have been prevented, and some were caused by something uncontrollable.

It’s not the only cause but, according to Forbes magazine, the leading current causes of price hikes are “supply chain issues, unsteady demands, energy uncertainty” and “too much demand on relative supply.” Under the pandemic of COVID-19, supply chains and production were hurt. Some businesses had to close permanently, lay off employees, or cut production. This caused less supply of certain products, but it didn’t change the demand. We all remember things like the shortages of toilet paper, paper towels, baby formula, some medicines, and most recently eggs. And under the shortages, prices of those items doubled, tripled and even quadrupled. The supply-and-demand effect caused inflation on a large amount of products in the past few years, but it isn’t fully responsible.

Throughout history the government is commonly responsible for inflation because of its debts and flooding more money into the economy. The U.S. government is currently guilty of both.

It isn’t a hidden fact the U.S is currently going under the snowball effect with our national debt. We are now 31 trillion dollars in debt and expected to be over 33 trillion at the end of 2023. “The IRS issued three Economic Impact Payments during the coronavirus pandemic for people who were eligible: $1,200 in April 2020. $600 in December 2020 and January 2021. And $1,400 in March 2021” (“U.S Government Services and Information”). “The federal government made direct payments to individuals totaling $931 billion to help with COVID-19” (U.S. Government Accountability Office). The stimulus checks made up almost 1/3 of the 3 trillion spent on COVID-19 relief. But we must remember that the government didn’t have this money. They just simply printed it.

These aren’t the only bills the federal government has funded in the past few years. They have spent absurd amounts of money and also printed extremely large amounts of money in return. When a government prints large sums of money, it makes the current money worth less. This is another big cause of inflation. But the last big cause and effect of inflation is the cost of living and rising wages. In 2022, the cost to buy houses went up anywhere from 15.5% to upwards of 30%. Not only did houses cost more, the interest rates also rose making it extremely expensive to get a mortgage on a house in 2022. But even if you didn’t buy a house, the rent was still expensive. It likewise went up 14% between the years 2021 and 2022.

The high cost of living made people want to be paid more. And for most, that actually was needed. So the government raised the minimum wage from around $7-$9 per hour to $12-$15 per hour according to the state. This does sound good for most people that they would now be getting paid more. But that just means that the businesses that employ them now have more expenses, and they pass those expenses to the customer. So in 2022-2023, businesses not only had to pay more for the products they bought, but they also had to pay their employees more. This caused labor shortages and only made inflation worse. They now pass those expenses down to us. So is it really worth the extra minimum wage?

Inflation hurts all Americans, but I think it hurts small businesses the most. Right now, depending on where you live, eggs can cost almost three times what they did just a year ago. And most food products have had similar price hikes. When you go to a restaurant, it is easy to notice that it costs a lot more than it did in the past. All businesses have many more expenses they are required to pay, and their options are to either charge more for their products or lose money. Large corporate companies still face these price hikes and have had to raise their prices. But they haven’t been affected nearly like the small businesses of America. Now 50% of small businesses fail within their first 5 years (Reichman). Many small businesses have been forced to close in the past four years. This is one of the worst effects of inflation.

I personally love to eat out. But since it costs a lot more to eat out and other things cost more, we aren’t able to do things like that as often. We also love to go on beach trips. But everything now costs 30% more than it did four years ago. So those luxuries happen less often.

A large percentage of people aren’t able to afford the same luxuries that they were a few years ago. For single parents, or people with many children, they can’t even afford things like basic necessities. Many people who live from paycheck to paycheck have to make major cutbacks on how they spend, which also hurts the economy. When people spend less money than before it cuts into the profits of those businesses. So once the effects of inflation start, they are extremely hard to stop.

Do I think our inflation could have been prevented? Yes. COVID-19 was unexpected and unpreventable, but the effects it had on the economy were. Sadly, I think that our country will go through a recession. Then, after the recession, I hope we have the opportunity to rebuild an even stronger economy. An economy that a pandemic can’t hurt. An economy that is better for small businesses instead of corporate America. Inflation is horrible, but I hope our future economy will be more prepared for the problems we face today.

“Consumer Price Index for All Urban Consumers.” U.S Bureau of Labor Statistics. Jan. 2023. Web. 17 Feb. 2023.

Kelly, Jack. “Inflation and Rising Costs Create Fear of Having To Work Into Your 70s.” Forbes. 15 Feb. 2023. Web. 17 Feb. 2023.

Reichman, Morris. “50% of Small Businesses Fail Within 5 Years.” Payro. 24 Feb. 2022. Web. 17 Feb. 2023.

“Stimulus Checks: Direct Payments to Individuals During the COVID-19 Pandemic.” GAO (U.S. Government Accountability Office). 29 June. 2022. https://www.gao.gov/products/gao-22-106044. 24 Jan. 2023.