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Consumer Price Index Increase

The Consumer Price Index (CPI) measures the change in prices paid by consumers for goods and services. It is one way to measure how Americans are faring during a recession.

Pricing in the energy and oil industries have been at all-time lows during the pandemic, beginning first in late February when Trump initiated a travel ban to China. The oil market went below zero for the first time ever in April.

Today, local gas stations are still selling to customers at an incredibly low price per gallon. Year-over-year prices in the energy sector are down 12%.

In other industries, however, prices are increasing.

Food is up 4.5%. Food at home (groceries) has increased 5.6%, compared to food away from home (restaurants) rose to 3.1%. Healthcare and medical services have also increased (medical services, 6%; medical care commodities, 1.3%)

Apparel is down -7.3%, but right now foot traffic in stores is limited due to the COVID-19 shutdowns. Travel is also down, but again, the limitations of safety regulations are keeping consumers from buying tickets.

Because many Americans are potentially unemployed due to stay-at-orders issued by their governors, low income individuals will find it difficult to meet daily necessities (e.g. food, electricity, and healthcare). This led the Trump Administration to consider issuing another stimulus check for lower income families. The extra $1,200 would help many low income Americans fair better until the pandemic subsides, allowing everyone to join the workforce again.

An important note about the rise in prices – usually prices rise due to inflation, but the current rate is estimated around 0.6%. Which is down from 2.3% in 2019.

Despite high unemployment and rising prices, consumers seem to be keeping up financially. According to an index by the University of Michigan, which seeks to find out how consumers perceive the general economy and their financial position, consumer sentiment increased by 8% month-over-month.

Manufacturing and Employment Trends

Another way to measure how consumers are faring during the pandemic is called the Employment Trends Index. This aggregates eight labor market indicators into a composite index that shows underlying trends in employment.

The Conference Board reported the ETI increased in June and that the index now stands at 49.05 points, up from 45.27 in May. However, it is still down year-over-year by 54.8%. The index includes measurements of industrial production, unemployment claims, and job openings.

The Federal Reserve reported an increase in industrial production of 5.4% in June, following a 1.4% increase in May. Every industry sector across the board saw a significant increase in production in June. Most likely reflecting states that ended their stay-at-home orders at the end of May.

All of this information also comes after a better than expected June jobs report from the Labor Department.

Even though cases may be rising in states like Texas, California, and Florida, the U.S. economy is finding a way to keep moving forward. The state of the economy will be how many Americans decide who to vote for in November. The Trump Administration will do everything they legally can to safe-guard U.S. economic interests.

Gross Domestic Product Recovery

The last major recession lasted for almost a year and a half. The lowest point real GDP reached was -8.4% from Q3 to Q4 of 2008. Fortunately, The reason for the current recession is not because banks were being careless with debt instruments. Americans seem to have a positive feeling towards economic recovery compared to 2008.

A study by the Pew Research Center showed that many Americans think the coverage of the COVID-19 virus has been exaggerated. Another study found that Americans feel that ways to prevent the virus are well understood, despite conflicting information.

Dr. Fauci has been encouraging everyone to follow the guidelines that have been issued by state officials and the CDC. Even though some republicans have pushed back against Dr. Fauci’s statements, Americans in general agree with wearing a mask at the very least.

States and their citizens have been working towards containing COVID-19 while also looking to increase real GDP. In the U.S., real GDP is down 5% from Q1 2019, and Gross Domestic Income is down 4.2%. Real GDP measures the monetary value of a country’s economy and accounts for inflation.

Economists were expecting low GDP due to reduced trade with China, as well as reduced labor and manufacturing. Few were surprised and many still believe the U.S. economy will recover sooner rather than later.

If anyone is worried that American capitalism might not work anymore, look how the socialist country of Venezuela fared during good times compared to the U.S.

Written ByAllen LaNear

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