It’s sorta like a combination Willie Nelson song and The Wizard of Oz: the world’s spinning out of control and nobody seems to know who’s behind the curtain turning the knobs and pulling the strings.
Energy prices in the stratosphere (fill the tank today because tomorrow it’ll cost more), rampant food price inflation, a housing market that’s on the ropes, a financial system beset by one mismanagement scandal after another, a U.S. dollar that’s taking a drubbing from other major currencies, and everything touched by oil (just about everything in daily life) more costly — it’s a grim scenario, with no relief in sight.
Corn, wheat, rice, and soybean prices are at levels farmers couldn’t have imagined in their wildest dreams three years ago, but at the same time growers are confronted with sharply rising costs for every input needed to produce, harvest, and transport those crops.
Toss in planting-time rains/floods in the Midwest, water curtailments in the West that will keep 200,000 acres or more out of production, spring flooding and other weather problems over much of the Mid-South, and a mixed bag of problems in the Southeast, and it’s not a pretty picture for the start of a season when world stocks of major commodities are shrinking and demand is burgeoning.
And despite the man behind the Federal Reserve’s curtain saying last week that a major downturn in the U.S. economy was less likely (two days after gasoline had shot up 15 cents or more overnight), Joe and Jane citizen are reduced to watching helplessly as the purchasing power of their stagnant salaries spirals downward.
Even more desperate are those with fixed incomes, such as Social Security or pensions, or “safe” investments such as CDs and money market accounts — the meager interest from which is gobbled up by inflation.
Like ostriches with their heads in the sand, it’s only with recent months that the Fed and the administration have even acknowledged the existence of significant cost-of-living inflation, continuing instead to publicize the relatively minor increases in inflation for the core Consumer Price Index, which doesn’t include energy or food.
Fed Chairman Ben Bernanke, faced with a public whose pocketbook knows all too well the impact of skyrocketing prices, is now talking tough about inflation and a concern for the public’s growing expectation that inflation is becoming the norm.
Lynn Franco, director of The Conference Board Consumer Research Center, said of the organization’s May report: “The Consumer Confidence Index now stands at a 16-year low. Weakening business and job conditions, coupled with growing pessimism about the short-term future, have further depleted consumers’ confidence in the overall state of the economy.
“Consumers’ inflation expectations, fueled by increasing prices at the pump, are now at an all-time high, and are likely to rise further in the months ahead,” Franco says. “As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead.”
Toss into all that the billions of dollars being poured into the folly that is Iraq, and the road ahead appears pocked with economic land mines.