Thursday, December 16, 2021

Stock Up While You Can

Last week we learned that the Consumer Price Index (CPI) had increased 6.8% over the last 12 months.

This week it was revealed that the Producer Price Index (PPI) had increased 9.6% in the 12 months ending in November.


Producers see price increases before consumers.

Producers also typically pass those increased cost on to consumers.

Do you remember last July when Joe Biden said that the inflation we were seeing was "temporary" and that "no serious economist" was suggesting that prices could spiral out of control?

President Joe Biden said Monday that “no serious economist” is suggesting price increases could spiral out of control, as he sought to reassure Americans that the current spikes are temporary.

Fortunately, I am not a serious economist. 

At the time that Biden was saying that I was pointing to clouds on the horizon regarding inflation. I predicted the high lumber prices we were seeing in the summer would likely come down but the wage inflation that was accelerating would not. 

I also predicted that Biden's approval could soon start sinking fast as he was vulnerable on his planned Afghanistan withdrawal, Covid spiking back up and inflation.

You can see what has happened to Biden's approval rating (Real Clear Politics average) since I wrote "Sinking Fast?" on July 27.

It is almost shocking when you see how fast and furious the increases to PPI have come over the last 12 months.

It is almost as if we have been transformed from another world.

What a difference a year makes!

Let's look at some of the components of the PPI index for different commodity groups.

Overall food goods were +11.6% over the last 12 months.

Beef, grains and cooking oils are all up around 40%.

Energy was +43.6% over the last 12 months.

Of course, these energy cost increases are responsible for much of the inflation in other sectors as the economy runs on energy---for production and transportation in particular.

It is no coincidence that inflation spiked in the United States beginning in January, 2021 when Joe Biden and the Democrats assumed power and started assaulting the fossil fuel industry.

Gasoline and home heating oil are both up over 100%.

Other large increases of interest.

Liquified petroleum gas                           +153.1%

Iron and steel scrap                                   +78.1%

Industrial chemicals                                  +47.9%

Transformers & power regulators           +33.5% 

RVs, trailers & campers retailing            +66.0%

A few categories have actually shown PPI decreases over the last year.

Eggs for fresh use                                      -6.9%

Print advertising                                        -1.0%

Property & casualty insurance                 -0.8%

Annuities                                                     -1.2%

Tax preparation & planning                     -1.9%

One other critical category has also seen a PPI decline over the last 12 months.

Alcoholic beverages                             -0.7%   

Any hope that Biden had that inflation was going to be temporary is gone.

However, your ability to cope with a drink has not been priced out of your reach...YET.

These producer price numbers suggest that the consumer inflation numbers can be expected to continue climbing into 2022.

My advice is stock up while you can on your beverage of choice.


Joe Biden doesn't want you complaining about any of it. 

After all, he says that inflation is good because it means the economy is great.

If he goes off script he might even utter a phrase* that was once popular when he was a much younger man.

What do you want? Eggs in your beer?

If you have never had an egg in your beer there has probably never been a better time to try it.


* Eggs in your beer as a popular phrase.

In the 1940s, the concept of putting eggs in beers turned into a popular, funny phrase people said to each other. “What do you want? Eggs in your beer?”

It meant that somebody was complaining about an issue even though they were in a good situation. For example, “You won free tickets to a concert, but you think the seats are too far from the stage? What do you want, egg in your beer?”

Perhaps the most interesting thing about the phrase was that putting eggs in beers wasn’t necessarily popular at the time. Most people who said it likely didn’t think it sounded like a treat, even though the phrase suggests it’s lovely.

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