Prices are going to rise, probably exponentially, over the course of the next few decades. But that age is now coming to a sudden, climactic, explosive end. Let me explain, with an example. I was shocked to read that a well-know German microphone company had just…stopped making them. And furloughed all its workers. Small or medium sized companies just…shutting down. The economy is undergoing a profound shock. Three factories — each hit in a different way.
The one in Japan caught fire due to an equipment malfunction — apparently the blaze took hours to put out because of the conditions. The one in Texas was hit by an historic snowstorm, which knocked out power for days.
The one in Taiwan is being affected by the worst drought in half a century — and microchips require huge amounts of water to manufacture. These are all effects of climate change. They might not be the kinds of monocausal direct effects climate change deniers and American pundits look for — the hand of God roasting a factory alive — but they are very much caused by living on a rapidly heating planet.
It should be eminently clear to see that when factories are freezing and burning, that is what climate change does to an economy before your very eyes. It is the first climate catastrophe related shortage to hit us at a civilizational, global level. But they are — and so we do have a microchip shortage that has been caused by climate change, aka global warming.
The chip shortage is just the tip of the immense shockwave rolling down the volcano. Well, some of the things that are already becoming more and more costly to produce are steel , food , and water. That is because all those things rely on energy, and energy is getting more expensive. Why is energy getting more expensive? The short-term answer is: Covid. The real answer is that even if they begin to produce more gas, energy prices will go on rising over the long run.
Because right about now, energy is vastly underpriced, like it has been since the beginning of the industrial age. When you buy a gallon of gas, who pays for the pollution, the carbon it emits, which heats the planet? Right about now, nobody does. Because we are going to need to use that money to rebuild all the cities and towns and systems and factories wrecked by flood and fire and drought and plague.
As the price of energy rises, the price of everything has to rise, too. The world has just one fossil fuel free steel factory so far. But our civilisation depends fundamentally on all these things. Without them? We go back to living medieval lives. All our steel and glass and concrete skyscrapers, factories, universities, cities, towns — kiss them goodbye. Everything you rely and depend on. While the price changes of cheese varied widely by type Brie down 6 percent, cheddar up 0.
There were a few notable exceptions where prices actually declined since last year. Similarly, the price of eggs went down 4 percent.
Prices for hard seltzer, the unofficial summer drink of , declined nearly 6 percent, perhaps reflecting the increased selection available , with everyone from Budweiser to Topo Chico getting in on the action. One of the biggest price surge stories of the year thus far has been lumber. Vox has a full explainer on it here. The lumber industry struggled in the years following the Great Recession, and production slowed accordingly. When Covid hit, many in the industry assumed that the situation was only about to get worse, so they dialed back production even more.
It turns out lots of people stuck at home had the same idea to undertake home renovation and remodeling projects. Others went looking for new homes , snapping up preexisting ones and starting to build. The supply-demand imbalance threw much of the industry out of whack, and lumber prices soared. This is what some economists say is likely to happen across the economy as some of the post-pandemic kinks get worked out. The supply side will catch up with the demand side as supply chains normalize, and in some cases, pent-up demand will ease, too.
They should stop going up and at some point, in some cases should actually go down. And we did see that in the case of lumber. There is no denying that some prices are rising at a quicker clip than they have in recent years; the big unknown right now is how long this will go on.
The Fed and the White House are betting that the current level of inflation is transitory, meaning this is a temporary bump as the economy rebounds from the pandemic, and soon things will settle back down. In testimony before Congress in June, Powell laid out the factors contributing to recent inflation increases, including falling prices at the start of the pandemic, supply bottlenecks, the pass-through of oil and energy prices, and increased consumer spending accompanying reopening.
The personal consumption expenditure PCE price index, which the Fed uses as its main gauge of inflation, ticked up slightly less in May than economists expected , which could be a signal that the pace of price increases is slowing.
The big fear among some economists is that the US will see a repeat of the s, when the country saw a sustained period of high inflation that was only brought to an end when the Fed took harsh measures and pushed the economy into a recession in the early s. Sustained inflation can also reduce the value of savings. Fed officials have already moved up their expected timeline for increasing interest rates to from , though forecasts can always change.
But is it time to start hoarding gold under your mattress? Probably not. That post-pandemic vacation you wanted to take is probably going to run you a little more than you thought it would, at least for now. Find out why. Supply chain backlog weighs on US economic growth. What companies are doing to attract workers. Toys stuck in supply chain chaos. Christmas trees may be hard to come by this year. Consumer prices for March rose 2. They were lifted in particular by surging energy prices, including the cost of gasoline — which jumped Oil prices got clobbered last year and didn't get back to their pre-pandemic levels until the start of In March alone, consumer prices climbed 0.
That was more than expected, as well as the largest increase since August Excluding volatile energy costs as well as food prices, which increased only 0. That was more than economists surveyed by Refinitiv had predicted. Prices for used cars and trucks — which got a big boost during the second half of last year as people across the country bought vehicles in response to travel restrictions — rose 0.
Year-over-year, used vehicle prices are still up 9.
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