Inflation Makes Recession Hurt Even More

This current recession was caused by a vast and increasing gulf between the wealth and income of the richest and the rest of America, and was kicked off by the unregulated greed of Wall Street. It has resulted in the loss of many millions of jobs, due both to the economic downturn and the continuing outsourcing of American jobs.

The government has been no real help in trying to create new jobs, especially since the Republicans took over the House of Representatives. Only a minimal amount of jobs are being created (barely enough to cover the number of new people entering the workforce), and those jobs don't have the pay or benefits of the jobs lost. The Republican solution to this is to give even more money to the rich and cut programs that help the jobless, the elderly, the poor, children and other Americans.

Normally this dire situation among the bottom 80-90% of Americans would have a downward effect on inflation, since many Americans have less money to spend. But not this recession, which seems to get more brutal for most Americans every day. Thanks to a particularly harsh winter and troubles in the Middle East, inflation has returned.

According to government figures the Consumer Price Index (CPI) rose by 0.5% in February (which would equal a 6% annual rise). The main culprits were gas (which rose by 4.7%) and groceries (which rose by 0.6%), but other items like airline tickets and medical costs also rose. This will come as no surprise to the millions of Americans who were already having problems paying their bills.

And its going to get worse. That's because wholesale prices climbed even more than the CPI in February. Wholesale prices jumped by 1.6% (more than a full percentage point higher than consumer prices). Wholesale food prices climbed by 3.9% (the biggest jump in price since November of 1974). It's not going to take long before these costs are passed on to consumers.

The rise in inflation for last year (2010) was about 2.1% for the whole year. That hurt, but it was manageable. But it looks like the rise in inflation for 2011 will be much larger. This recession was bad enough with the economy failing to produce anywhere near the needed amount of new jobs. Rapidly rising inflation just adds to the economic pain being felt by most Americans.

I wish I could say that the government is poised to take action to help -- especially in the creation of new jobs. But that's not true. The Congress has done nothing since being sworn in to help create a single job, much less the hundreds of thousands that are needed monthly.

New jobs, and the extra spending that those new jobs will create, is the only thing that will bring this nation's economy back (or pay down the deficit, since the new jobs would create new tax income also). But Congress is not interested in creating new jobs right now, and that will undoubtably remain true for the next couple of years.

Voters need to remember this Republican intransigence when they go to the polls in November of 2012. The Democrats may be nothing to brag about, but the Republicans seem to be determined to completely destroy this economy.