Poll after poll shows that inflation — not the pandemic, not Ukraine — is the most salient issue on Americans’ minds. That tracks, considering the average cost of the goods and services people buy has increased 8.5% since last year. Functionally, it’s akin to losing 10% of your paycheck.
But inflation is insidious in a couple of ways. First, it tends to spiral, meaning that there’s no obvious end in sight. Second, it’s complex and its are causes hard to pin down.
That’s led to a heated debate about what’s causing this particular bout of inflation. Economists like Larry Somers argue that this is a demand-side issue, that the government overheated the economy through the American Rescue Plan and other COVID-era legislation. With too much money in their pockets, Americans began spending more on a limited set of goods and services, leading to the inflation we’re experiencing now. But then the obvious question is: why were goods and services limited? And that points to the supply-side. COVID has wreaked havoc on global supply chains, limiting the supply available.
But there’s something else too. Inflation isn’t even across the board. Rather, it’s been driven by major increases in oil and gas prices. Meanwhile, oil and gas executives have been throttling supply and using their newfound profits for stock buybacks that yield profits for their investors — and using the specter of inflation to justify their price hikes.
I wanted to understand inflation, and the ways that corporations have been hiding behind it to raise their prices. Lindsay Owens is the Executive Director of Groundworks Collaborative, a progressive economic policy think tank. They’ve been tracking inflation and the ways that major corporations have been using it to their advantage — and driving it in the process. She joined me to share more about inflation, what’s driving it, and what needs to be done to slow it.
Lindsay Owens on What's Driving Inflation