(The Center Square) – The latest federal report suggests more troubles for the U.S. economy, even as experts hoped for a post-COVID economic surge.
The Bureau of Labor Statistics Thursday released new data showing a major spike in inflation, the largest since the financial crisis from over a decade ago.
“Over the last 12 months, the all items index increased 5.0 percent before seasonal adjustment,” BLS said. “This was the largest 12-month increase since a 5.4-percent increase for the period ending August 2008.”
Higher inflation means more expensive goods and services even as Americans struggle to recover from the economic fallout of the COVID-19 pandemic and the ensuing shutdown.
Some goods increased in price more than others. Household furnishings saw “its largest monthly increase since January 1976” and new vehicles increased 1.6% in May, its “largest 1-month increase since October 2009.”
The inflation report comes one day after the U.S. Department of Labor showed disappointing job creation for the month of May. The U.S economy added only 559,000 nonfarm jobs last month, short of 650,000 predicted by economists. Unemployment for the month was 5.8%.
In April, the economy added only 266,000 nonfarm jobs, falling far short of experts’ prediction of 1 million new jobs. Those figures combined with rapidly rising inflation have experts worried.
“The index for used cars and trucks continued to rise sharply, increasing 7.3 percent in May,” BLS said. “This increase accounted for about one-third of the seasonally adjusted all items increase. The food index increased 0.4 percent in May, the same increase as in April. The energy index was unchanged in May, with a decline in the gasoline index again offsetting increases in the electricity and natural gas indexes.”
The inflation data was not entirely unexpected. Last month, BLS released data showing a similar spike from the previous 12 months.
Republicans were quick to place the blame for increased inflation at the feet of President Joe Biden. Many on the right have tried to popularize the term “Bidinflation.”
“Consumer prices soared to a 13-year high with inflation up 5% in May,” Rep. Byron Donalds, R-Fla., wrote on Twitter, adding that Biden’s “economic agenda with outrageous deficit spending is highly destructive to our nation. Small businesses and lower & middle income-families suffer the most from #BidInflation.”
Republicans argue the rapidly rising debt from Biden’s proposed trillions of dollars in additional spending proposals will only worsen the problem.
“Inflation is up 5%,” said Sen. Tom Cotton, R-Ark. “And Biden wants to spend $6 trillion more to see how high it will go.”
A Rasmussen poll from May found that “76% of American Adults are at least Somewhat Concerned about inflation, including 45% who are Very Concerned.“
For now, economic experts are uncertain how much inflation will continue to rise this year.
“We have had more inflation in the first 5 months of this year than most forecasters expected for the full year,” said Jason Furman, a Harvard professor and expert at the Peterson Institute for International Economics
Biden has remained optimistic, though. After last months’ data, he encouraged Americans to focus on the long term.
“So, some months will exceed expectations, others will fall short,” Biden said. “The question is, ‘What is the trendline? Are we headed in the right direction? Are we taking the right steps to keep it going?’ And the answer clearly is yes.”