June CPI exceeded expectations and was the fastest pace for inflation in four decades

June CPI exceeded expectations and was the fastest pace for inflation in four decades

inflation swells

June CPI exceeded expectations and was the fastest pace for inflation in four decades

Key Points

  • Consumer Price Index (CPI) rose by 1.3
  • June CPI exceeded expectations
  • Fastest pace for inflation in four decades

Today, the U.S. Bureau of Labor Statistics announced that in June the Consumer Price Index (CPI) rose by 1.3, not seasonally adjusted. Year over year, the CPI has gone up 9.1% in the last 12 months. The June CPI exceeded expectations and was the fastest pace for inflation in four decades.

The Georgia Center for Opportunity’s (GCO) take: “This new inflation reading ranks among the worst monthly inflation rates in U.S. history, and the worst in recent history,” said Erik Randolph, GCO’s director of research. “We have to go back to March 1980 — the last year of the Carter administration — to find a higher monthly inflation rate. The bottom line is that we may not have reached peak inflation, and there’s no telling how long the price level crisis will persist. Meanwhile, the rhetoric from the White House and Congress will do little to rectify the situation. There needs to be new thinking within the Washington Beltway.”

GA unemployment 3%
the U.S. Bureau of Labor Statistics reported the unemployment rate remained at 3.6%

the U.S. Bureau of Labor Statistics reported the unemployment rate remained at 3.6%

UNEMPLOYMENT CASH

the U.S. Bureau of Labor Statistics reported the unemployment rate remained at 3.6%

Key Points

  • Total nonfarm payrolls for the U.S. rose by 372,000
  • Unemployment rate remained at 3.6%.

On Friday, the U.S. Bureau of Labor Statistics reported that total nonfarm payrolls for the U.S. rose by 372,000 in June and the unemployment rate remained at 3.6%. The increase was higher than expected.
The Georgia Center for Opportunity’s (GCO) take: “The job numbers are seen as positive overall, but the real story is at the state level where economically free states are performing so much better than more restrictive states,” said Erik Randolph, GCO’s director of research. “Of the 14 states that have recovered all their jobs lost due to the COVID-19 pandemic, 12 of them are governed by leaders more friendly to economic freedom. Recent migration data show that businesses and workers are leaving more restrictive states — like California and New York — to migrate to more free states, like Georgia, Texas, Florida, and Tennessee. These states are far better positioned to weather an economic recession as well.”
GA unemployment 3%
May CPI set a new recent record for inflation

May CPI set a new recent record for inflation

calculator and graphs

May CPI set a new recent record for inflation

Key Points

  • May the Consumer Price Index (CPI) set new record for inflation
  • Lack of discussion over the price level, which is the new ‘floor’ for prices in the economy
  • Leaving the price level elevated means we are leaving the economically disadvantaged further behind, exacerbating the economic divide in our nation

New record for inflation

Today, the U.S. Bureau of Labor Statistics announced that in May the Consumer Price Index (CPI) rose by 1%, not seasonally adjusted. Year over year, the CPI has gone up 8.6% in the last 12 months. The May CPI exceeded expectations and set a new recent record for inflation.

The Georgia Center for Opportunity’s (GCO) take: “We now know that the early statements from the Biden Administration and the Federal Reserve that this inflation is transitory was an incorrect assessment. It looks a lot more like it’s becoming embedded into the economy,” said Erik Randolph, GCO’s director of research. “What’s both remarkable and troubling is the lack of discussion over the price level, which is the new ‘floor’ for prices in the economy. The only discussion is about bringing the inflation rate back down. This means that the federal policymakers are willing to leave the price level elevated. Leaving the price level elevated means we are leaving the economically disadvantaged further behind, exacerbating the economic divide in our nation.”

 

The U.S. Department of Education has approved Georgia’s request to waive several testing and attendance measurements

The U.S. Department of Education has approved Georgia’s request to waive several testing and attendance measurements

girl remote learning

The U.S. Department of Education has approved Georgia’s request to waive several testing and attendance measurements

Key Points

  • Georgia’s request to waive several testing and attendance measurements for the 2022 school year was approved by U.S. Dept. of Education
  • This move locks in the learning loss that took place during the COVID-19
  • American Relief Package Act requires at least 20% of funds be spent on recovering learning loss

    Georgia’s request approved

    The U.S. Department of Education has approved Georgia’s request to waive several testing and attendance measurements for the 2022 school year. “Our goal is to establish a new baseline, rather than compare your schools’ performance to pre-pandemic norms,” said School Superintendent Richard Woods.

    Buzz - GA School quote

    The Georgia Center for Opportunity’s (GCO) take:

    “By doing this we are locking in the learning loss that took place during the COVID-19 pandemic,” said Buzz Brockway, vice president of GCO. “This means for some students, they will never recover from the pandemic learning loss they experienced, nor are they expected to recover. This ignores the millions and millions of dollars Georgia’s school districts are being sent via the American Relief Package Act, which requires that at least 20% of those funds be spent on recovering learning loss. What will local districts do with that money? Is giving up best for students? Georgia’s parents should march in loud protest to accepting that pandemic learning loss is the new norm.”

     

    Reality is Likely to be Far Less Rosy

    Reality is Likely to be Far Less Rosy

    Reality is Likely to be Far Less Rosy

    Reality is likely to be less rosy…

    Some economists are hoping that inflation has peaked and will tick down in the coming months, after the pace of inflation slowed slightly in April. But Erik Randolph, director of research for the Georgia Center For Opportunity (GCO), warns that the reality is likely to be far less rosy.

    “What we saw with the April Consumer Price Index was disinflation. That means the rate of inflation decreased but inflation is still occurring and our purchasing power is declining,” Randolph said. “Meanwhile, wage increases are lagging behind price increases. The vast majority of workers will have lower standardsof living because their budgets will not buy as much as in the recent past. Some workers will get handsome pay raises, but they will be the exception rather than the rule.

    Erik - Inflation swells quote

    What’s needed?

    “The core problem here is that the price level has risen, setting a new floor for costs. The only way to lower the price level, by definition, is to allow for deflation. But our policymakers are afraid of deflation because of the economic schools of thought that they adhere to. What is needed is new economic thinking in Washington, D.C. from economists who are not afraid of deflation but recognize it’s the only way to bring the price level down that benefits the most people. The mess we’re in now are the signs of stagflation, meaning the rising price level may be soon accompanied with slower economic growth and loss of employment. The only way to mitigate that scenario would be to adopt policies to allow for supply-side growth.”

    New Research Predicts Long-Term Pain for Labor Market

    New Research Predicts Long-Term Pain for Labor Market

    New Research Predicts Long-Term Pain for Labor Market

    social distancing

    Long-term pain for labor market due to the COVID-19 pandemic

    New research predicts long-term pain for the labor market due to around 3 million workers who plan to remain permanently sidelined over concerns of physical illness or physical impairment due to the COVID-19 pandemic.

    The Georgia Center for Opportunity’s (GCO) take: “The authors of the long social distancing study have produced very helpful data on those no coming back into the labor force, estimating a 3.5 million shortfall in March by comparing the current observed level with a linear trend using the time period of January 2015 to December 2019 as the basis for the forecast,” said Erik Randolph, GCO’s director of research. “Using the current employment statistics survey instead of the current population survey, our own research shows a shortage of 6.6 million employed persons that would include persons holding multiple jobs. We use the same method of comparison by subtracting the forecasted data from the observed data, but instead of using a linear trend as the basis for comparison that can often overestimate the forecasts, or the reverse, we use an ARIMA forecast model, not for five years but starting at the low point after the Great Recession. In addition, our research provides forecasts and analyses for each of the 50 states where there is a wide disparity when it comes to job recovery.”

    For more, read Randolph’s research report on the economic impact of the pandemic shutdowns.

     

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