Rising prices for both consumers and producers are dragging the economy closer and closer into recession territory. Elon Musk thinks that the effects of inflation are far worse than the Bureau of Labor Statistics’ numbers would have you believe.
The stock market and economy have started the second quarter of the fiscal year in rocky shape following the disastrous inflation numbers of the first quarter. Since Joe Biden took office, prices have been steeply rising for both businesses and individual consumers, with little to no respite on the horizon. One man who isn’t shy of the public limelight is Elon Musk, who believes that the official numbers actually “understate the true magnitude of inflation,” and he’s not wrong.
In March, the inflation rate in the U.S rose to a 40-year high of 8.5%, which is just the latest in a stream of bad economic news for Americans. The White House has consistently passed the buck on negative inflation news, avoiding responsibility, and their absence of action to help struggling Americans has earned a lot of criticism. The average consumer has seen an increase in the price of goods in all sectors. Moreover, they’re now paying an average of almost $2 per gallon more at the gas pump compared to 2020. This increase has caused both Democrats and Republicans to ask President Biden and the White House to take action and reopen the domestic oil industry; however, it seems to have fallen on deaf ears. Gas prices have risen since the beginning of the Biden presidency (with nationwide gas shortages occurring in 2021). Despite that, White House Press Secretary Jen Psaki has repeatedly blamed the Russia-Ukraine conflict for our collective pain at the pump, coining the phrase “Putin Price Hike.”
But while consumers have been feeling the pinch, an often overlooked impact of inflation is its strain on producers and manufacturers. During the latest earnings call of electric vehicle giant Tesla, CEO Elon Musk announced a record $3.3 billion quarterly profit. Still, he drew attention to the fact suppliers have raised prices by up to 30% since last year. While Tesla has committed to not raising its prices, at least for now, many smaller companies cannot do the same thing. As suppliers increase their prices, many manufacturers find themselves forced to pass these expenses down to the customer in order to maintain their profit margin.
As the White House and Congress set their eyes on the 2022 midterm cycle, inflation seems to have taken a backseat, but without action, inflation is set to get worse before it gets better, with Musk’s warning it could last for “at least the remainder of this year.” If inflation continues to worsen, it could put a lot of congressional Democrats in troubled waters, with more and more voters putting inflation and the economy at the top of their priority list heading into November. With a 30-year record high number of retirements for House Democrats, keeping a Democrat majority in Congress could soon be out of reach for President Biden.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.