New data released Friday by the Department of Commerce show that American families in April purchased 0.7% more goods and services but paid 0.9% more for them, and real disposable personal income was flat due to rising prices. The Federal Reserve’s preferred inflation metric—the Personal Consumption Expenditures (PCE) price index—remained three times as high as the Federal Reserve’s target rate, with energy prices increasing 30.4% over the last year. PCE measures how much consumers are spending, and the price index measures the costs of what consumers are buying.
Additionally, the April advance economic indicators from the Census Bureau showed additional headwinds for consumers, with retail inventories shrinking after adjusted for inflation, pointing to continued higher prices in the future. The economy already shrank 1.5% in the first quarter, at an annualized rate, while inflation was 8.0%, and the second quarter faces significant headwinds.
EJ Antoni, research fellow in regional economics with The Heritage Foundation’s Center for Data Analysis, released the following statement Friday on the latest data:
“These numbers are only the latest indication that the middle and working-class are being squeezed by bad government policy. Personal savings have fallen 79% under the Biden administration and they continue to collapse as credit card debt explodes. Consumers have become demonstrably poorer thanks to this administration’s policies.
“This inflation is a direct result of the monetary malpractice at the Fed, which has given Congress and the President trillions of dollars to spend. These higher prices should be seen by everyone for what they are: the hidden tax of inflation is paying for the last two years of reckless, unfunded spending. Everything has a cost. The prices we are paying now simply dwarf any relief from the stimulus checks Americans received during the pandemic.
“The assertions by this administration that more government spending will reduce inflation are laughable. Inflation is fundamentally a tax and neither it nor any other tax has ever been reduced by the government spending more money. The cure to inflation is for the government to spend less, borrow less, and print less money.”