Barack Obama’s pitch for a second term is singularly built upon blaming his predecessor for the malaise. However, the irony is that he is slated to leave office and saddle the next president with his legacy; higher consumer prices and lower income.
Here is what consumers will confront over the next 6-12 months, according to a new analysis by Moody’s Analytics cited by Reuters:
Another area of concern for consumers is food prices. Rises in the prices of corn and soybeans and other field crops as a result of drought this year in the U.S. Midwest are expected to feed through into food prices late this year and in early 2013.
U.S. soybean prices jumped 40 percent over the summer, while wheat shot up about 50 percent. Prices have eased a bit since then, but the increases are expected to filter down to consumers.
“We are starting to see evidence of food prices moving up so that’s definitely going to be a drag on disposable incomes,” said Hoyt of Moody’s Analytics.
The U.S. Department of Agriculture sees food price increases of 3.5 percent to 4.0 percent next year, greater than this year.
Hoyt says that could cut 0.2 percentage point from economic growth over the winter, when food prices could peak.
Reflecting the strain on many budgets, U.S. shoppers plan to spend an average of about $750 on gifts, decorations and other holiday items this season, only 1.2 percent more than a year ago, according to a recent survey published by the National Retail Federation.
That would be the smallest increase since 2008-2009, when holiday sales fell 1.8 percent during the financial meltdown.
“You could argue that we are still at recession levels on a lot of the consumer indicators,” said Jeffrey Cleveland, a senior economist at investments manager Payden & Rygel in Los Angeles. “I don’t expect the consumer to be a powerhouse.”
Another big extra outlay will be in healthcare premiums, which on average are costing employees more than $2,200 in 2012, according to Aon Hewitt, a human resource consulting firm.
Average health care premiums are forecast to jump by 6.3 percent in 2013, according to Aon Hewitt
Over the last five years, employees’ share of healthcare costs will have increased more than 50 percent, it said.
On top of everything else, the cost of a college education is being felt more keenly by many Americans.
Tuition costs for the 2012-13 academic year rose again but federal grant aid and tax benefits did not increase in the previous year – the most recent for which data is available – according to a report published on Wednesday by the College Board Advocacy & Policy Center.
So this is what we have to show from the Obama presidency; higher gas prices, higher food prices, higher tuition costs, and higher health insurance premiums. The amazing thing is that Obama has racked up $5.6 trillion in debt attempting to deal with these problems. Yet this is the result of all his socialist interventions. Now we are left with higher costs and a higher tab to pay China for failed social welfare programs and market-distorting subsidies.
The reality is that it is the very government interventions in these sectors that have driven up the costs of the vital goods and services.
Higher food prices: Ethanol mandate? check. Onerous FDA food regulations? check. Weaker dollar? check.
Higher gas prices: War on Coal? check. Ethanol mandate? check. EPA regulations on fuel blends? check. Flat-earth, anti-drilling? check. Weaker dollar? check.
Higher tuition costs? More inflation-inducing subsidies and loans so Big Ed can jack up tuition costs? Check. Government takeover of student loans in the Obamacare bill? Check.
Higher health insurance premiums: Obamacare? checkmate.
Now, surely consumers are enjoying higher incomes so they can afford the new normal of higher costs, right?
Wrong! Income is down $4,000 per family and the poverty rate reached 15.7% in 2011, the highest level since 1965.
Higher costs, lower income, less jobs, and more debt – that is the legacy of taxation, regulation, over-litigation, and subsidization. That is the legacy which the next president must countermand.
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