Sen. Rand Paul (R-KY) released a new report on Tuesday, detailing the impact of inflation on American consumers and small businesses, and the news is grim.
The Bureau of Labor Statistics recently announced that consumer prices rose by 7% between December 2020 and December 2021, marking the highest rate in four decades. The higher prices are directly impacting American’s standards of living, with “real average hourly earning” decreasing by 2.4% over the same period, according to the agency.
In his report, “The Hidden Tax,” Sen. Paul explains how rising prices have bottlenecked the already struggling economy.
“$4.9 trillion in COVID-19 stimulus spending has led to one of the highest and most sustained levels of inflation in U.S. history,” stated the Kentucky lawmaker in a press release. “While government stimulus spending was intended as a form of relief, and low- and middle-income families, as well as small business owners, were promised that their taxes would not increase, Americans everywhere are now paying a hidden tax called inflation.”
“In recent months, prices on nearly everything from gas, food, and clothes to electricity, car prices, and rent, have all increased, and unfortunately, it’s only going to get worse,” Paul continued. “Congress needs to realize that further spending at this time of rapidly rising prices is only going to continue the trend of rising prices on this nation’s already vulnerable businesses and families.”
Citing data from multiple federal agencies, Paul’s report reveals that inflation is disproportionately affecting low-income Americans:
“Seventy-one percent of households making under $40,000 annually have indicated economic hardships from rising prices, as opposed to just 29 percent of households making $100,000 or more,” the report shows. “Low and middle-income families spend a larger portion of their income on high-inflation items, such as gasoline, used cars, and food. Families in the lowest income quartile spend nearly 40 percent of their annual income on these three categories. As a means of comparison, families in the top quartile spend only 10 percent of their annual income on these categories.”
The same holds true for small businesses, according to the report:
“Eighty-two percent of small businesses reported raising prices in the last several months, 42 percent reported raising prices by 20 percent or more.”
The report goes on to state that “42% of small businesses reported taking out a loan to cope with the pressures of inflation in this last year,” while “large corporations have reported consistent profit margins.”
Paul also points to recent findings from Goldman Sachs’ 10,000 Small Businesses project, which found that 86% of surveyed small business owners “are concerned about inflation,” while roughly the smae number “have seen an increase in operating costs.”
This comes as monetary policymakers are facing pressure to hike interest rates without triggering a recession.
Harvard University economist Kenneth Rogoff appeared on FOX Business and explained that “it’s not so easy to raise interest rates to fight inflation when public and private data is high, when the stock market is high, when housing prices are high, when the economy is still weak,” adding that central bankers willing to do so would have “a lot of stomach.”
The only one who continues to believe everything is rosy is the President.
In a rare, proper press conference held Wednesday in honor of his first full year in office, Biden boasted, “I didn’t over-promise but I have, probably, outperformed what anybody thought would happen,” insisting his disastrous “Build Back Better” agenda was still the best antidote to inflation.
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