After the last income tax hike, growth in Minnesota’s state tax revenues slumped
Back in 2020, I noted that the growth or otherwise in Minnesota’s state tax revenues seems to be a function of the growth or otherwise of the state’s economy rather…
The Bureau of Labor Statistics (BLS) released its inflation numbers for November this morning and they did not make for happy reading over breakfast.
The Consumer Price Index (CPI) rose by 0.8 percent from October to November. In the year to November, the CPI rose by 6.8 percent, its fastest rate of annual increase since June 1982. So-called ‘core CPI’ — which excludes food and energy prices — was up 0.5 percent for the month and 4.9 percent from a year ago, the fastest rate since mid-1991.
As the Washington Post reported:
The increases were driven by broad-based price hikes in most of the categories tracked, similar to October. Indexes for gasoline, shelter, food, used cars and trucks and new vehicles were among the larger contributors. Airline fares also increased. Also, rents have been climbing, influenced by soaring home prices and supply chain issues limiting construction of new homes.
The energy index was up 3.5 percent in November, and measures of gasoline were up 6.1 percent. Recent moves by the Biden administration intended to bring prices down at the pump aren’t reflected in Friday’s data. [We have commented on these recent moves here: Author]
The price increases can be seen in the grocery store aisles, as food companies including Campbell Soup, Kraft Heinz and Mondelez have all announced higher prices on items that include soup, macaroni and cheese, crackers, and cookies. Dollar Tree also announced it’s hiking prices on most products to $1.25.
The federal data showed that “food at home,” namely groceries was up 6.4 percent in the past year, and that “food away from home” also climbed 5.8 percent. Steak was up almost 25 percent compared with a year ago, and bacon 21 percent. Eggs were up 8 percent, apples 7.4 percent and flour roughly 6 percent.
Friday’s inflation report showed rent was up 0.4 percent in November compared with the month before, and 3 percent compared to last year. Economists and policymakers say that hikes in the cost of shelter are more concerning, because they’re not influenced by supply chains, which are expected to ease with the pandemic.
Over the year, energy prices have risen 33.3 percent, food prices have jumped 6.1 percent — the fastest rate for for both for 13 years — and used car and truck prices are up 31.4 percent. Shelter costs, which comprise about one-third of the CPI, increased 3.8 percent on the year, the highest since 2007.
This is having an impact on worker’s wages. The BLS announced in another report out today that, while gross pay has increased 4.8 percent over the past year, real average hourly earnings which account for inflation, declined another 0.4 percent for November and are now down 1.9 percent for the 12-month period.
Jason Furman, a former head of the Council of Economic Advisors under President Obama, notes that the impacts of this have been felt differently by different workers. While workers in the top three quartiles saw their real wages fall in the period from November 2019 to November 2021, those in the bottom saw them rise. However, when compared to the period November 2017 to November 2019 — when real wages rose for all — the rate of real wage increases was lower for all four groups.
A final point to note, again from Furman, is that while inflation is happening in lots of places right now, it is especially bad here in the United States.
Why is all this happening? What will happen in the future? I’ve written about that at some length previously. Suffice it to say for now, I am towards the more pessimistic end of the spectrum.
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