Joe Biden's PPI crisis, June edition

Yesterday, the Biden administration's spin was that the inflation figures were tough, but they were already out-of-date. Today's Producers Price Index, aka PPI, flushed that spin into the dustbin of history as some of the worst spin in presidential history thanks to the PPI coming in at a much-hotter-than-expected 11.3% year-over-year.

That's actually the least bad news from the report. The month-over-month rate was 1.1%. Quoting Larry Kudlow, "inflation is broadening, deepening and accelerating." Today's PPI report proves that. The PPI is higher than the CPI, which means that the wholesalers haven't passed on the price increases that they've experienced yet.

Kevin Hassett's explanation of long-lasting inflation is chilling but it's something that people understand because they're living it. Had the PPI shot up for 2-3 months, people would've been better equipped to deal with it. As it lasted past the transitory stage, people needed to deplete their savings, if they had any to start with.

Now, as producers pass their costs onto retailers, consumers are putting more of their everyday purchases (groceries, gas) onto their credit cards. At some point, there comes a max-out point. What's needed is a breather from all the inflation but there's no relief in sight. Here's why:

The next shoes to drop are employment freezes and wages collapsing. If this doesn't get turned around with new policies, those shoes will drop. It's a matter of when, not if.

JP Morgan's Jamie Dimon thinks that we're heading in the wrong direction:

On the one hand, Dimon said the U.S. "economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy."

He then rattled off a number of warning signs, saying: "But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road."

Thanks to the Trump tax cuts, the rising wages that came with them and the virtually nonexistent inflation of the Trump economy, families built up their savings. Families were lifted out of poverty, too. The Trump savings have prevented (thus far) a major recession. Returning to those policies, coupled with a stable dollar and fiscal restraint, would fix this inflation problem. That won't happen with unified Democrat control. Democrat tax hikes will only make things worse.

I'm not pretending like Republicans have a stellar record on fiscal restraint. They simply don't. What I'm saying is that We The People need to force politicians into fiscal restraint. Only then will consumer confidence rebound and inflation recede.