I know I know I know... we have all seen the headlines and have felt the pain at the pump. Inflation is prominent, but what are the reasons? Well, inflation is when there is too much money out there and people have excess cash to buy a little extra. A little extra cash to buy an extra box of cereal, an extra pair of jeans, or an extra Gucci handbag. When people are doing that, it causes more demand than supply, and that causes prices to rise.

During the pandemic people were driving less, so that led to savings in gas costs. As a result of lower driving many insurance companies lowered their premiums which resulted in lower insurance premiums for their customers. How many rounds of stimulus got passed during the pandemic, I think 3 rounds of stimulus. Add it all up and the American consumer had a surplus of cash. I am talking about most consumers, but sure there were a few not so lucky who faced eviction.

During the pandemic people were driving less, so that led to savings in gas costs. As a result of lower driving many insurance companies lowered their premiums which resulted in lower insurance premiums for their customers. How many rounds of stimulus got passed during the pandemic, I think 3 rounds of stimulus. Add it all up and the American consumer had a surplus of cash. I am talking about most consumers, but sure there were a few not so lucky who faced eviction.

The American consumer right now has a tight labor market. We are living through “the great resignation.” People left their jobs for better jobs, and that caused employers to pay higher wages to attract workers. So, add a tight labor market and higher wages on top of the consumer who already has saved up cash during the pandemic.

The consumer is flushed with cash and is doing “revenge spending.” After being locked inside for nearly 2 years people are getting out and making up for lost time.

The travel industry is seeing a nice rebound. Uber reported earnings saying their revenue is close to what it was in 2019 before COVID. The major airlines have all eased mask mandates and are reporting near 2019 levels of passengers on their airplanes.

Fuel prices have skyrocketed and the American consumer, who again is flushed with cash, is revenge spending and travelling again. The pent-up demand for travel is obvious and is leading to higher fuel prices. Bank Of America released a survey of their clients, many of whom reported they are eager to travel despite the higher cost of an airline ticket, and/or higher cost of gas in terms of hitting the road in their cars.

Pent-up travel demand is leading to higher fuel prices, and pair that with the awful situation in Ukraine. Many nations have said they will not be purchasing Russian oil which will hurt supply. Less supply of course leads to higher prices, and couple that with higher demand, yes even more higher prices.

Inflation is at a 40 year high, but the American consumer right now is less worried about inflation. Again, with higher wages, more savings, and stimulus money, the consumer has the cash and wants to make up for the nearly 2 years they were locked up inside.

It isn’t just YOLO spending causing inflation. Do not forget about the supply chain crisis. Yes it is difficult to unload the docks and get everything out to market with a backlog of container ships and a shortage of truckers to haul those goods to market.

Wow, so is it any wonder why we are seeing inflation, the facts are there. I’ve seen the blame many people have put on President Joe Biden, but anyone who wants to put it on a president the results of inflation, well they probably do not know how the economy works. I mean it isn't as if Joe Biden passed a legislation that sudden caused prices to skyrocket. This is a capitalistic economy at work.

Donald Trump said in an interview in March or April that if he were president we wouldn’t being seeing inflation. Okay, what policy would he have invoked to reduce inflation? What powers does a president have to cut inflation? Really... none. He is just using as a reason to make his cry baby self look good.