The inflation report for March came out Tuesday, and the media continued its reckless and irresponsible inflation psychology reporting (Inflationary psychology can become a self-fulfilling prophecy, because as consumers spend more and save less, the velocity of money increases, further boosting inflation and contributing to inflationary psychology.)

Is inflation outpacing recent years right now? Yes. Is inflation hurting people’s pocketbooks and family budgets right now? Yes. Am I happy about paying more for groceries. No. Am I happy about paying more for a tank of gas than I ever have at any time in my life? Hell no!


But in reporting on inflation, instead of explaining economics much of the media resorts to lazy political framing – “this is bad for President Biden and Democrats in the midterms” – rather than attempting to explain to people the economic factors behind the inflation. And much of the corporate media gives a free pass to the corporations that are profiteering and price gouging, taking advantage of the economic disruptions, the predominant source of inflation.

This is because 99.9% of reporters did not even take an Econ 101 class in college. They have no idea what they are talking about, and they simply parrot what some equally ignorant politician has to say. This benefits no one.

So I will try to explain some of the economic factors behind Tuesday’s inflation report. This will be long, but bear with me.

First, the Washington Post reports, Prices rose 8.5 percent in March compared to 2021, driven by energy costs:

The inflation surge in the United States picked up speed in March, as prices rose 8.5 percent compared with a year ago. It was the largest annual increase since December 1981, with energy prices spiking because of Russia’s war in Ukraine.

[T]he inflation data, released Tuesday by the Bureau of Labor Statistics, showed prices rose 1.2 percent in March compared with February. Price increases for gas, shelter and food were the largest contributors to inflation, underscoring how inescapable these cost increases have become.

Inflation was relatively steady, even low, for much of the past decade, but picked up significantly as the global economy emerged from the pandemic. A number of economists and policymakers thought inflation would ease this year as supply chain issues cleared up and government stimulus faded. But Russia’s February invasion of Ukraine created a new burst of uncertainty and pushed prices even higher.

World leaders have responded to Russia’s invasion of Ukraine by trying to economically isolate Moscow, but that has only led to more economic uncertainty.

Russia is one of the world’s largest producers of oil, and its invasion of Ukraine prompted the U.S. government and others to try to restrict Russia’s ability to sell energy. Those moves drove up energy costs; crude oil soared to new highs last month, and rising gasoline prices quickly followed.

Note: If Europe actually does cut off its dependence on Russian energy supplies, it will only drive up the cost from other suppliers to meet the increased demand. Does anyone believe that OPEC is going to give the world a break by tapping its excess capacity? Hell no!

The Post explains, Why gasoline prices remain high even as crude oil prices fall:

When the cost of crude oil soared to new highs in early March with the Russian invasion of Ukraine, prices at the gasoline pump followed. They climbed 17 percent in a little over a week.

But when crude prices eased — they’re now down more than 20 percent from their March high — pump prices eased somewhat but have remained elevated.

This pattern is so common, especially with gas prices, that economists have a pet name for it: rockets and feathers. When crude prices jump, pump prices tend to rise like a rocket. But when crude prices fall, pump prices tend to descend gently, like a feather. [Call it what it actually is, price gouging.]

This widely documented phenomenon helps explain why gasoline has remained stubbornly expensive even as crude gets cheaper, and why gas stations tend to pocket fatter profits when prices are falling than when they’re rising.

Economists and policymakers offer myriad reasons for what fuels the rockets and lightens the feathers, from corporate greed to collusion, but the strongest force may simply be consumer interest.

Drivers shop more carefully — and force stations to compete — when prices are rising, said Clemson economist and gas price expert Matthew Lewis.

Give me a break! I grew up in the service station business when there were actual “gas wars” on gas prices, and service stations would give away gifts when you filled up your tank, like dishes and glasses. And we were full service then, no self-service gas pumps.

I have always maintained that the “gas wars” on gas prices was insane. during the OPEC oil embargo customers would line up in a queue for blocks for gas that was two cents or as much as five cents cheaper. How much gas did they burn in those old fuel-inefficient 1970s cars while waiting in line? Do the math: a 15 gallon tank at 2 cents a gallon is 30 cents; a 15 gallon tank at 5 cents a gallon is 75 cents. They burned that much gas or more waiting in line.

It was common back then for customers to say “give me $2 of gas.” During the OPEC price shocks of the 1970s and gas rationing, I twice had someone pull a gun on me and demand “fill ‘er up.” How effin’ rational was that?

For context: The Department of Energy reports the average price for a gallon of gasoline in 1973 was 39 cents, but in 1974, it rose to 53 cents. For that, I got a gun pointed at my head in an armed robbery. There were long lines and panic buying at gas stations as Americans were shocked to see gasoline shortages during the first OPEC oil embargo.

Just a few years after the 1973 oil shock, a second oil crisis arose. The Iranian Revolution began in January 1978, disrupting the country’s oil exportation process. Availability dropped as a consequence, but in reality, Iranian oil exportation only dropped by a small percentage. Nevertheless, the panic was enough to send gas prices around the globe skyrocketing once again. America was, for the second time in a decade, faced with high prices, long waits at the gas station, and extreme inflation. The average price for a gallon of gasoline in 1978 was 67 cents, but by 1981 it rose to 1.38 a gallon.

And something else you haven’t seen today: gas shortages during the OPEC crisis meant odd-even rationing, i.e., staggered fill-up days based on license plates, incredibly long wait times at the pump, and often no gas at all at some stations. Back in the ’70s, some gas stations took to posting flags — green if they had gas, yellow if rationing was in effect, and red if they were out of gas. Yeah, those were fun times.

I’ve lived through worse than today. So quitcherbitchin. You will survive this.

The Post continues:

When prices soared in early March, stations made just 35 cents on each gallon. In the most recent week, as crude prices continued to fall, stations were pocketing 55 cents a gallon before labor and other expenses, according to OPIS. It was easily their best profit since the pandemic began.

When crude prices fall, pump prices can be propped up by “tacit collusion,” said Lewis, of Clemson. That sounds shady, but it’s a completely legal process in which station owners — without communicating with each other through any means other than the price signs towering over their pumps — independently realize they will all benefit if prices remain high, so nobody wants to be the first to lower them.

“Let’s be honest,” De Haan said, “gas stations are a for-profit business. They’re not looking to put themselves out of business by losing money on the way up and then shooting themselves in the foot by lowering their price too fast on the way down.”

* * *

“Anybody who’s producing oil is making boatloads of money right now,” said University of California at Berkeley economist Severin Borenstein, a godfather of rockets-and-feathers research. “That doesn’t mean oil producers are doing anything anticompetitive,” he clarified later, “just that they are the lucky beneficiaries of a disrupted market that is driving the market price way above their production costs.”

When the oil industry gets lucky and prices rise, executives reap the benefits, according to an Energy Journal analysis of pay at 78 U.S. energy companies by University of Michigan economist Catherine Hausman and UC Berkeley economist Lucas Davis.

Executives tend to get substantial raises when oil prices climb, even though prices are generally driven by geopolitical forces and other factors outside their control, Hausman said. And when prices fall, executive pay doesn’t budge.

Other than oil producers and executives, credit card companies may be the biggest beneficiaries of high oil prices, Kloza said. They take a percentage of whatever the customer pays at the pump, so their cut soars alongside gas prices, yet they don’t have to invest any additional time or resources in the transaction.

Within a few weeks or months, gasoline prices will catch up with pump prices as gas stations push each other’s prices down in a slow, steady battle for customers. But even as crude prices fall, they remain relatively high in historical terms, making it unlikely that pump prices will fall to pre-pandemic levels in the near future, experts say.

“As politicians spar over who’s to blame for recent increases in gas prices, a large majority of Americans say oil companies and Russian President Vladimir Putin are major culprits,” a new ABC News/Ipsos poll finds.

Next, food prices. There are two great “bread baskets” in the world: the United States and Ukraine.

Thanks to Putin’s Russo-Ukraine war, Ukrainian farmers may not be able to plant this year. Straight from Ukraine: Farmers Share Planting Updates, Concerns and More:

Even if the war in Ukraine stopped today, Nick Gordiichuk says he has no idea when farmers would be able to get into fields and plant crops.

It could take months – and not because farmers don’t have fertilizer or fuel, though neither is readily available.

“We have no access,” he told AgDay Host, Clinton Griffiths, on Thursday.

“You can hear the shelling, you see the missiles and some tractors can get on the mines, which are in the field. It’s a dangerous situation,” Gordiichuk explained. “We find mines in the field or old rockets that didn’t explode. We will have to wait and get special help to clear the fields after the war.”

Crippled Crop Production

Flory asked Tkachenko how many acres of wheat he expects farmers there to plant this season. Preparation is normally underway by now.

Tkachenko calculates farmers in Ukraine are on track to plant 7 million hectares of wheat – roughly 17.3 million acres – this spring.

That’s about half of 2021 levels, according to Agriculture Minister Roman Leshchenko. A March 22 Reuters article quotes him as saying 15 million hectares of wheat had been expected to be planted this spring, prior to the Russian invasion.

Gordiichuk says he has heard an estimate that roughly 25% of Ukraine’s total acreage will be planted this year.

“But some farmers are not thinking about planting, because we don’t know where we will sell our crops,” he says. “At the moment, all the seaports are blocked by Russians.”

The Associated Press adds, Russian war worsens fertilizer crunch, risking food supplies:

The war has pushed up the price of natural gas, a key ingredient in fertilizer, and has led to severe sanctions against Russia, a major exporter of fertilizer.

The conflict also has driven up the already-exorbitant price of natural gas, used to make nitrogen fertilizer. The result: European energy prices so high that some fertilizer companies “have closed their businesses and stopped operating their plants,” said David Laborde, a researcher at the International Food Policy Research Institute.

The U.N. says Russia is the world’s No. 1 exporter of nitrogen fertilizer and No. 2 in phosphorus and potassium fertilizers. Its ally Belarus, also contending with Western sanctions, is another major fertilizer producer.

[H]igher fertilizer prices are making the world’s food supply more expensive and less abundant, as farmers skimp on nutrients for their crops and get lower yields. While the ripples will be felt by grocery shoppers in wealthy countries, the squeeze on food supplies will land hardest on families in poorer countries. It could hardly come at a worse time: The U.N. Food and Agriculture Organization said last week that its world food-price index in March reached the highest level since it started in 1990.

The fertilizer crunch threatens to further limit worldwide food supplies, already constrained by the disruption of crucial grain shipments from Ukraine and Russia. The loss of those affordable supplies of wheat, barley and other grains raises the prospect of food shortages and political instability in Middle Eastern, African and some Asian countries where millions rely on subsidized bread and cheap noodles.

Axios adds, Russia’s invasion pushed global food prices to record high (excerpt):

Food prices soared to record highs last month, as the war in Ukraine exacerbated what was already a global crisis.

The prices of wheat and sunflower oil, in particular, are rising because of the war. Some Ukrainian ports are closed and others face disruptions.

Issues will certainly drag into next year as some farmers in Ukraine — the leading sunflower-oil exporter and a top grains supplier — are unable to plant crops.

The Washington Post adds, Lengthening war in Ukraine creates major problems for global economy:

With no sign of an early end to the war in Ukraine, the risk is growing that the conflict will tip a fragile global economy into a slump.

With U.S. and NATO officials warning that the fighting in Ukraine could continue for months or even years, a greater economic toll looms.

On Tuesday, the World Trade Organization slashed this year’s growth forecast to 2.8 percent from 4.1 percent before the war, saying the conflict had inflicted “a severe blow” on the world economy.

Gregory Daco, chief economist for Ernst & Young, said a lengthy war — and a further increase of allied sanctions on Russia — could strip up to two percentage points off global growth.

“The longer this situation goes on, the more significant the erosion becomes,” Daco said.

So yes, Vladimir Putin and his war against Ukraine is the villain here, not President Biden and Democrats.

The United States is not going to be able to make up the loss of production from Ukraine due to a mega-drought in the West and drought in the Great Plains.

California is the largest producer of food in the United States, and it’s not looking good this year. Crushing California drought could spell trouble for crops and wildfires:

A crushing drought that’s gripped California for years is on track to get even worse over the coming months. Much of the state’s freshwater comes from mountain snowmelt, which makes the lack of snow this past winter a worrisome development for California’s reservoirs and waterways.

The Sierra Nevada saw less than 10 per cent of its normal snowfall from January through March.

The bulk of California’s precipitation falls during the fall and winter, with communities often going months without seeing meaningful precipitation between May and October.

Adding insult to injury, hot temperatures washed over California early this spring. Temperatures soared well above 30°C as early as the beginning of March.

Years of lacklustre rainy seasons and long, hot dry seasons have exacted a compounding toll on the state’s resources. California finds itself lurching from one season to the next in a worse spot than it began.


Another long stretch of worsening drought will have far-reaching effects on agricultural interests across the state.

Farmers throughout the Central Valley face the prospect of a significant burden from the ongoing drought and lack of winter snowfall in the mountains. California is a major grower of produce like almonds, lettuce, and strawberries.

The enormous expanse of farmland across central California accounts for the vast majority of the state’s water consumption during very dry years. Much of that water comes from snowmelt that pools up in reservoirs downstream.

Snowmelt is a significant source of freshwater for lower elevations across California. The state’s reservoirs are heading into the heart of spring at less than half of their total capacity, and the underwhelming snowpack in the mountains will stress the region’s freshwater resources even further.


While the effects on freshwater reserves and agriculture will have far-reaching impacts, the most tangible effect of California’s stunning droughts are the wildfires that have ravaged communities across the state in recent years.

While there’s no direct correlation between snowpack and the severity of a wildfire season, the extreme lack of precipitation paired with intense heat has desiccated vegetation and allowed one horrendous blaze after another to break out.

About two-thirds of California’s 20 most destructive wildfires on record have occurred since 2017, with seven of those fires unfolding in 2020 and 2021. These deadly blazes have consumed hundreds of thousands of hectares of land and burned tens of thousands of homes. 2018’s Camp Fire was the most destructive wildfire in California history, killing 85 people when it almost entirely destroyed the town of Paradise.

This year’s ongoing and widespread drought, bookended by the major early-spring heat, will put the state in a bad position heading into the summer months and the heart of wildfire season this autumn.

America’s grain belt in the Great Plains is also being hit by drought. Great Plains could see its most significant drought in a decade:

The Great Plains are no stranger to drought, with severe drought occurring around seven times in the last 20 years. But the 2012 drought period represents the worst drought for many who have lived in the area for their entire lifetimes.

Now they may face another one like that.

This summer, the region could be at risk for another extreme drought. According to the U.S. Drought Monitor, 70 percent of the Southern Plains region is currently in a severe drought or worse (D2+). This is up from just 7 percent six months ago.

Precipitation deficits tell one part of the story. The Southern Plains area has received between 2 and 8 inches less than average for the last six months. Evaporative demand, or the potential loss of water from the surface, has increased stress on the vegetation, which can dry them out more quickly.

As a result, farmers have abandoned a large amount of winter wheat, affecting both supplies in the country as well as potential exports. Winter wheat conditions for the country are the poorest they have been in the last 20 years for the beginning of April.

In the Plains, the amount of winter wheat in good to excellent condition is a mere 30 percent (down from 53 percent last year), and the amount in poor to very poor conditions is 36 percent, up 20 percentage points from last year.

The combination of dry air, below average precipitation and dry vegetation is also increasing the risk of wildfire. Several fire indicators — those that assess the fuels available, the amount of energy from fuels and the potential difficulty of fire containment — are very high across the region.

The National Interagency Fire Center is forecasting above normal risk for significant wildfires for April. A higher risk for significant wildfires continues across the Southern Plains and spreads into the Northern Plains throughout the spring and summer.

Conditions are likely to worsen before they get better, according to the Climate Prediction Center’s seasonal outlook for April, May and June.

[W]hat does this outlook mean as we get to summer?

Dry conditions will further increase precipitation deficits and extend the length of time it will take to recover. Warm conditions will increase evaporative losses to the atmosphere, continue to dry out soils and exacerbate the severity of the drought. Those dry soils will feed into the dry atmosphere in the summer, inhibit the development of beneficial storms and also increase the frequency of brutally hot days.

So the Russo-Ukraine War and global climate change are driving up food prices, on top of the slow recovery from Covid supply chain disruptions. From the inflation report on Tuesday:

The food index rose 1 percent in March compared to February. It is up 8.8 percent compared to the prior 12 months, the largest increase since May 1981. Few categories have been left untouched. Breakfast cereal was up 2.4 percent from February to March. Rice prices rose 3.2 percent, ground beef grew 2.1 percent and eggs were up 1.9 percent. Milk was up 1.3 percent, potatoes 3.2 percent, and canned fruits and vegetables tacked on 3.8 percent.

Are you bitchin’ about the price of eggs for your kids Easter egg dying and the price of chicken? This is due to a major avian flu outbreak in in the United States. What consumers need to know about the avian flu outbreak:

An outbreak of highly pathogenic avian influenza (HPAI) in chicken and turkey flocks has spread across 24 U.S. states since it was first detected in Indiana on Feb. 8, 2022. Better known as bird flu, avian influenza is a family of highly contagious viruses that are not harmful to wild birds that transmit it, but are deadly to domesticated birds. As of early April, the outbreak had caused the culling of some 23 million birds from Maine to Wyoming.

[T]he virus of concern in this outbreak is a Eurasian H5N1 HPAI virus that causes high mortality and severe clinical signs in domesticated poultry.

[W]hen H5N1 is diagnosed on a farm or in a backyard flock, state and federal officials will quarantine the site and cull and dispose of all the birds in the infected flock. Then the site is decontaminated.

After several weeks without new virus detections, the area is required to test negative in order to be deemed free of infection. We call this process the four D’s of outbreak control: diagnosis, depopulation, disposal and decontamination.

This means the price of eggs and chicken will continue to remain high for months ahead as this process of control plays out and new flocks can again be raised.

Speaking of disease, we are not yet done with Covid-19, despite people’s best efforts to pretend that the pandemic is over and everything can return to normal. Tell that to China which is in the throes of an Omicron variant outbreak. China is where most U.S. manufactured goods are made, so the Covid supply chain disruptions will be ongoing.

Axios reports, Chinese markets sink as lockdowns and inflation linger:

Chinese stocks suffered their worst tumble in weeks Monday amid growing COVID-19 lockdowns throughout the country.

Lockdowns in China, a manufacturing behemoth, could weaken both its economy and the world’s, and add fresh snarls to global supply chains.

China has imposed a hard lockdown in Shanghai, a city of 25 million and a major economic hub, for roughly a month. Some now fear lockdowns could also spread to the manufacturing center of Guanzhou.

Monday also brought fresh Chinese inflation stats, including the Producer Price Index for March. The index, which measures wholesale prices charged by Chinese factories, showed a higher-than-expected year-over-year increase of 8.3%, as lockdowns and international energy prices continued to push wholesale prices upward.

See alsoBritain’s inflation rate climbed to 7 percent, the highest in 30 years.

Do you get this? Inflation is a global problem in a global economy, it is not just limited to the U.S. Chinese manufacturers will pass their costs onto U.S. retailers, who then will pass it on to you. See how this works?

The AP adds, Anti-virus shutdowns in China spread as infections rise:

Anti-virus controls that have shut down some of China’s biggest cities and fueled public irritation are spreading as infections rise, hurting a weak economy and prompting warnings of possible global shockwaves.

[M]most of [Shanghai’s] businesses still are closed. Access to Guangzhou, an industrial center of 19 million people near Hong Kong, was suspended this week. Other cities are cutting off access or closing factories and schools.

Spring planting by Chinese farmers who feed 1.4 billion people might be disrupted, Nomura economists warned Thursday. That could boost demand for imported wheat and other food, pushing up already high global prices.

[T]he risk that China might tumble into recession is increasing, Ting Lu, Jing Wang and Harrison Zhang of Nomura warned in a report.

“The logistics crunch is worsening,” they said. “The markets should also be concerned about the delayed spring planting of grain in China.”

The New York Times reports, China’s economy pays a price as lockdowns restrict nearly a third of its population.

Nearly 400 million people are estimated to be under some form of lockdown in China as officials try to stop a fast-moving Omicron outbreak that is beginning to weigh on the world’s second-largest economy.

[T]he Japanese bank Nomura has estimated that 373 million people in 45 cities are currently under some kind of lockdown, about a third of the population, accounting for the equivalent of around $7.2 trillion in annual gross domestic product.

It’s part of a pandemic strategy that is increasingly at odds with China’s own economic growth expectations — one that has prompted economists and even the country’s premier to sound an alarm.

* * *

China’s response to its latest outbreak is also beginning to have an impact on the world’s global supply chain, as factories that make iPhones, electric cars and semiconductors have had to stop operations. Some critical components cannot be trucked from ports to factories because of roadblocks and stringent Covid test requirements.

[T]he efforts to prevent an outbreak are creating such a big problem that economists have revised down their expectations for China’s economic output this year. One economist has gone so far as to predict that China could go into recession in the coming months.

If Chinese workers are in lockdown at home, they are not going to their jobs in factories making goods for export to the U.S.  So the Covid-19 supply chain disruptions will be continuing, causing inflationary pressure.

The slowdown in China’s economy could have one beneficial side effect for U.S. consumers: Weaker oil demand, especially in China, might ease supply crunch caused by sanctions.

Nevertheless, Supply Chain Hurdles Will Outlast Pandemic, White House Says:

In a report released Thursday, White House economists argue that while the pandemic exposed vulnerabilities in the supply chain, it didn’t create them — and they warned that the problems won’t go away when the pandemic ends.

“Though modern supply chains have driven down consumer prices for many goods, they can also easily break,” the Council of Economic Advisers wrote. Climate change, and the increasing frequency of natural disasters that comes with it, will make future disruptions inevitable, the group said.

[In] recent decades, Ms. Rouse and the report’s other authors write, U.S. manufacturers have increasingly relied on parts produced in low-cost countries, especially China, a practice known as offshoring. At the same time, companies have adopted just-in-time production strategies that minimize the parts and materials they keep in inventory.

The result, the authors argue, are supply chains that are efficient but brittle — vulnerable to breaking down in the face of a pandemic, a war or a natural disaster.

Because of outsourcing, offshoring and insufficient investment in resilience, many supply chains have become complex and fragile,” they write, adding: “This evolution has also been driven by shortsighted assumptions about cost reduction that have ignored important costs that are hard to turn into financial measures, or that spilled over to affect others.”

This is the fault of the business strategies of global corporations, not the government.

Finally, don’t even get me started on the real estate and rental markets. This is the result of 10 plus years of not building enough residential units after the 2008 Great Recession, caused by Wall Street’s subprime mortgage fraud. Now corporate investors are buying up whatever single-family homes come on the market, corporatizing the homes in the rental market. They are also buying up apartment complexes and even mobile home parks, dramatically raising rents and forcing out existing tenants. This is another financial crime by Wall Street investors, i.e., the predator class, which is not being addressed by Congress.

So to summarize: inflation is due to the two plus years of economic disruption caused by a global pandemic in a global economy, exacerbated by the Russo-Ukraine War, and exacerbated by climate change and drought, particularly in the U.S. There is also a longstanding housing crisis in the U.S., a response to the 2008 Great Recession.  Corporations are also taking advantage of these major economic disruptions to engage in profiteering and price gouging, profiting off of other people’s misery. This is called capitalism.

None of this is the fault of President Biden or Democrats, who are doing their best to mitigate inflation issues. On the other side of the aisle are obstructionist Republicans whose only goal in life is to block whatever the Democrats are tying to do to mitigate inflation issues. They cynically believe it enures to their political benefit to simply blame Democrats for inflation,  because Republicans literally have no understanding of complex economic issues. They openly admit that they are a post-policy party with no agenda for 2022. They have no answers to mitigate inflation issues.

In fact, the obstructionist positions they have taken during the global pandemic over the past two plus years (actively sabotaging Covid recovery policies), and their fawning support for Russia in the Russo-Ukraine War (because their “Dear Leader” is a Putin puppet, as is Fox News) is only exaserbating the problem. Yet the corporate media never calls out Republicans or holds them accountable for their economic sabotage. Why is this?