It has often been said that trends start in California and sweep the nation. We can hope that it’s not true of gas prices. I took the photo above yesterday on Manchester Boulevard in Los Angeles.
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Tags: recession
Time Machine photo.
If you’ve spent any time at all in a grocery store, it’s not news that food prices are skyrocketing. Organic Romaine lettuce has almost doubled from $2.49 per package to $4.49 per package. Fresh carrots have jumped from $1.29 to $2.99. And I’ve seen apples, which cost $1.29 a couple of months ago, as high as $1.99 per pound.
And it’s not just fresh food. Canned corn has doubled from 69 cents to $1.29. And my wife bought a can of green beans today for an astounding $2.49. Yes, vegetables have pretty much doubled in price this year.
Milk seems to be stable at its new higher prices from last year. Meat is beginning to climb and, with the rapid increases in the price of corn, can be expected to skyrocket in the coming months.
Have wages risen to accommodate these price increases? Not exactly.
Real average hourly earnings fell by 0.4 percent, seasonally adjusted, from February 2010 to February 2011. A 0.6 percent increase in average weekly hours combined with the decrease in real average hourly earnings resulted in a 0.2 percent increase in real average weekly earnings during this period.
That 0.2% isn’t nearly enough to keep up with the actual cost increases at the supermarket.
The Consumer Price Index reflects much more modest increases, about 0.5% last month. It’s rigged to show much lower inflation. For example, it presumes that when the cost of steak increases, we’ll switch to hamburger. But what if, after three years of economic challenges, we’re already eating hamburger?
Tags: recession
WayneRad photo.
“Due to the economy and the challenging times that plague us today…”
Any letter that starts that way is bound to get worse. This one came from my doctor, who for years has maintained a practice consisting of himself and a Physician’s Assistant, two or three nurses, and four support staff. Now that office is closing.
I spoke to my doctor at length today about what caused him to shut his practice and become an employee of the local hospital. He gave two reasons. First, the economy is so bad that people can’t afford to see their regular doctor. They put off taking care of things until it becomes an emergency. And both Medicare and private health insurers have cut their reimbursement rates, so he doesn’t get paid as much for the patients he does see.
Secondly, Bush-era changes to health care provider requirements that take effect this year are too expensive for him to implement. In order to continue to accept Medicare, he tells me, he would have to have a Medicare specialist on staff. It would cost him, as a single practitioner, just as much to accept Medicare, as it would a medium-sized practice with a number of doctors, which will also need to have one Medicare specialist on staff.
He (along with all other health care providers) is also required to completely computerize his medical practice. He had computerized a lot of it several years back, but had hesitated on certain things because he questioned their safety. Late last year, he finally made the jump to full computerization. About a month ago, one of the systems he interfaces with transmitted a virus, which eliminated his ability to access his patients’ medical records. “They are there,” he told me, “but I am locked out.” It’s been this way for over a month. Instead of the full-featured medical record program I’ve seen him use for years, this time I watched him type my information into Google Docs.
April 1, he will be moving his practice to a building adjacent to the hospital. His PA and staff will not be joining him. With this closure, eight people lose their jobs and another building stands vacant.
This follows the closure in the past year of our favorite market and pharmacy, several restaurants, the local video rental store, a furniture store, Robert’s Arts & Crafts, and other local businesses.
Wal-Mart and Home Depot, however, are still open.
Tags: recession
Tom Varco photo via Wikimedia Commons.
My doctor recently prescribed a new medication – one for which there is no generic substitute. I knew it wouldn’t be cheap, so I called around to various pharmacies to find out how much it would cost. The results: Walgreens was the cheapest at $365; Wal-Mart wanted $374, and Smith’s wanted an astounding $414. That’s per month.
I do have health insurance, but it doesn’t have separate prescription coverage – I pay the cash price until my $5,000 deductible is fulfilled.
To put that in perspective, the median household income for my county is $39,914 or $3,326 per month. This one prescription costs 11% of the median income! If you deduct FICA taxes and median housing, the prescription eats up 15% of what’s left.
That’s not an unusually expensive medication. If my wife didn’t have a better insurance plan than I do, she’d be paying over $900 a month for her prescriptions. That’s 27% of the median income! Together, we’d be paying more than a third of the median income to the pharmacy!
What do people do when a single medication for a single family member costs 15% or more of their disposable income? Simple: they don’t take it.
I wonder which is more expensive for society: providing prescription coverage, or paying for treatment for health conditions for those who can’t afford to buy their medications.
Tags: health insurance
Roebot photo.
There have been some eye-catching price increases since the first of the year. As the White House insists there is no inflation, here are some of the prices bumps we’ve seen in the past two months:
| Product | December Price | Current Price | Increase | Annualized |
| Gasoline | 2.74 | 3.36 | 23% | 136% |
| Goat Pellets | 12.99 | 17.99 | 38% | 231% |
| Barley (cwt) | 9.99 | 13.10 | 31% | 187% |
| Hay (2-string bale) | 4.00 | 8.00 | 100% | 600% |
Veterinary medications have typically gone up 100% since the first of the year, and our vet reports than one particular medication went up a staggering 952%. Veterinary lab tests performed at private labs have increased 100 – 200% as well, although (so far) those performed at the state lab have not increased.
My own medications have also gone up, with one increasing 87% since December. That one med now costs roughly the same as my health insurance premium.
In this economy, there is no room for us to pass price increases to our customers. They are already strapped. That means small businesses like ours are getting squeezed. We in turn will spend less, cutting here we can as we pay more for expenses we can’t avoid. And labor, which has the greatest positive effect on our local economy, will be the first thing to get cut: we will do more ourselves so we can pay others less. We’ve already cut our ranch hand’s hours in half.
In the twisted logic of the federal government, this means there is no inflation because our expenditures remain constant. We are substituting or buying less, which (they theorize) has a commensurate effect on the economy. Or at least it allows them to say that inflation rates remain low.
In economic terms, when there are more dollars in circulation, those dollars have less value than if there were fewer dollars in circulation. The Fed’s policies over the past ten years have been inherently inflationary. Sooner or later, prices must rise as the reduced value of the dollar becomes evident.
They can spin the numbers any way they like, but it’s obvious to me that my dollar doesn’t go as far today as it did just two months ago.
This graphic representation of the federal budget shows the relative size of spending vs. income. (Meeker image via Polizeros)
In a speech two weeks ago, President Obama proclaimed, “[I]t’s absolutely essential to live within our means…” – but apparently not on his watch. His budget proposal would trim the deficit by a staggering (?) 8% – and, he says, reduce the deficit by $1.1 trillion over ten years. That’s an eventual reduction of 79%, still allowing a huge deficit to increase the national debt – and the final reductions would occur during someone else’s presidency!
Balancing the budget will be no easy task, especially since both parties are afraid to talk about tax increases. The federal government spends almost half again as much as it brings in. A $100 billion (8%) reduction proposed by Obama is far more significant than the $60 billion in cuts proposed by the GOP. Yet neither party has the political will to do what is necessary to bring spending and revenue into balance.
Photo by Tao_zhyn
“How hard it will be for those who have wealth to enter the kingdom of God! … It is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God.” –Mark 10:23-25
“Rich (adj.) \rich\: having abundant possessions and especially material wealth.” – Merriam-Webster online dictionary
Jesus told the rich man, “Go, sell what you own, and give the money to the poor, and you will have treasure in heaven; then come, follow me.” I’m glad I’m not rich, aren’t you? He surely meant those super-wealthy who have many more times the wealth the rest of us do. Jesus wasn’t much of a statistician, but perhaps he meant the Top 5%. Or maybe even the Top 10%. People with mansions, huge bank accounts, private transportation (lie jets and helicopters) unavailable to the rest of us, unnecessary toys. The economic elite.
Surely that’s not me!
The problem is, I’ve seen enough of the world that I have to question that premise. Questioning leads to facts. Like these, for example:
- As of 2005 (before the recession started), 1.4 billion people earned less than $1.25 per day.
- In terms of household wealth, “$2,200 per adult placed a household in the top half of the world wealth distribution in the year 2000. To be among the richest 10% of adults in the world required $61,000 in assets, and more than $500,000 was needed to belong to the richest 1%, a group which — with 37 million members worldwide — is far from an exclusive club.”
- Based on global statistics, GNP per capita of $9,386 puts a country in the “high income” bracket. US GDP per capita is $47,123.
- One source suggests that the world average income per year is $5,500 – or $8,900 when adjusted for purchasing parity. “High income” is a household income of more than $28,550 ($29,480 adjusted for purchasing parity).
- Fewer than 9% of the world’s population own a 4-wheeled motor vehicle.
In other words, if your household wealth is above $61,000 per adult, if your household income is more than $29,840 per year, if you own a car – you are rich, one of the privileged few in the world. And yes, I am one too.
…That the latest email scam offers me an Immigration and Working Pass to go to Spain!!
Tags: recession
AP reports that wholesale food and energy prices are rising, and seems surprised to find new danger of inflation despite the tepid economic “recovery.” The stock market is up, commodities are rising, but hiring is flat and wages are down. So how can there be inflation?
My macroeconomics professor used this mantra: “Inflation is always and everywhere a monetary phenomenon.” The more money you pump into the economy, the less value each unit has. If the money supply increases faster than the value of the economy, inflation is unavoidable.
The money supply has increased by 2/3 over the past ten years. Despite the downturn in the economy, or perhaps because of it, M-1 has increased 66% and M-2 has increased 77%. Over the same period, GDP increased only 42%. The money supply grew much faster than the economy. So why are we surprised that our dollar doesn’t go as far as it used to?
Incidentally, the price of goat feed has already risen 13% this month. Brace yourselves! Whether or not you got a raise last year, things are going to cost more.
Tags: government, recession
With both parties blaming the other for our financial woes, you might have expected a dose of fiscal responsibility in the latest tax bill to come out of Washington. You’d be disappointed.
Kiplinger (The Kiplinger Tax Letter 85:25) reports that the “compromise” tax bill includes all the income tax cuts, plus a reduction in Social Security taxes for 2011. Yes, that same Social Security plan that is desperate for funding will get even less next year– $120 billion less for each year the tax cut remains in place.
And while I can’t argue with extending unemployment benefits, the bill comes through with more expenses and less income than ever. It’s expected to add $700 billion to the already-bloated deficit.
If I ran my business this way, they’d send me to jail!
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