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Funding the rich with tax breaks that disproportionately benefit them may be helping keep inflation high
Recent reports indicate higher-income households are maintaining strong spending, boosting sectors like travel and dining, which has pushed up airfares (up 5.9% in August per US Travel Association) while hotel rates vary.
Lower-income spending has slowed amid cost pressures from tariffs and other factors. That uneven demand can sustain inflation, potentially keeping it elevated despite a weak job market.
___Many economists and some key members of the Fed think that the current pickup in inflation reflects one-time increases from Trump’s sweeping tariffs and won’t lead to a lasting inflationary trend. They argue that a weaker job market will hold down wages and force companies to keep prices in check.
Yet, Joe Brusuelas, chief economist at RSM, a tax and consulting firm, says that higher-income households are still spending sufficiently to push some prices higher, such as hotel and airfare costs, which leapt last month. Such spending could keep inflation stubbornly high even in a weak job market, he said.
“The Fed’s getting ready to cut into a sustained increase in prices,” he said. “Very unusual spot. ... we can see tariff induced inflation in a slow, steady and methodical manner.”
Goods prices picked up last month, a sign Trump’s sweeping tariffs are pushing up costs. Gas prices jumped 1.9% just from July to August, the biggest monthly increase since a 4% rise in December. Grocery prices climbed 0.6%, pushed higher by more expensive tomatoes, apples, and beef. Rental costs also increased, rising 0.4%, faster than the previous month.
Clothing costs rose 0.5% just last month, though they are still just slightly more expensive than a year ago. Furniture costs rose 0.3% and are 4.7% higher than a year earlier...
https://apnews.com/article/inflation-economy-trump-federal-reserve-fabecefa501709184895bf73b3dc698a
Yet, Joe Brusuelas, chief economist at RSM, a tax and consulting firm, says that higher-income households are still spending sufficiently to push some prices higher, such as hotel and airfare costs, which leapt last month. Such spending could keep inflation stubbornly high even in a weak job market, he said.
“The Fed’s getting ready to cut into a sustained increase in prices,” he said. “Very unusual spot. ... we can see tariff induced inflation in a slow, steady and methodical manner.”
Goods prices picked up last month, a sign Trump’s sweeping tariffs are pushing up costs. Gas prices jumped 1.9% just from July to August, the biggest monthly increase since a 4% rise in December. Grocery prices climbed 0.6%, pushed higher by more expensive tomatoes, apples, and beef. Rental costs also increased, rising 0.4%, faster than the previous month.
Clothing costs rose 0.5% just last month, though they are still just slightly more expensive than a year ago. Furniture costs rose 0.3% and are 4.7% higher than a year earlier...
https://apnews.com/article/inflation-economy-trump-federal-reserve-fabecefa501709184895bf73b3dc698a
...this just demonstrates the inefficiency and absurdity of the Trump republicans' economy.
They put more money in rich people's pockets, and while lower income Americans lose ground, their influence on the economy is being negated by the ability of rich people to disproportionately consume at rates which distort the actual impact of a regressing economy, keeping all of the triggers that would act to remedy the imbalance at bay.