Morton Marcus: Inflation is the cost of what we want

Morton Marcus

For The Republic

2020 will be the missing year. Before and after 2020 will be the years we see as the continuum of our lives. 2020 will be the Great Interruption, a chasm for some and just a dip for others caused by COVID-19.

Data for 2020 will be dismissed as a historic ellipsis. But such data should not be ignored because they tell us much about ourselves and our nation in a time of great stress. Recently, the U.S. Census Bureau released a statement read by TV newsreaders with great solemnity: “In 2021, 27.1 million Americans reported living at a different residence than a year earlier. … This represents an 8.4% mover rate, the lowest documented rate in over 70 years.”

Get that? Over 70 years! Well, what did you expect? The disruptions of COVID kept us home, but with a new sense of the value of being home. Value was found in working from home, not commuting, being home to care for children or other family members, and rediscovering the strength within ourselves.

Since we found new value in our homes, we were disinclined to sell them to others who felt constrained by their existing housing. In addition, vast numbers of renters sought to become homeowners. With this surge in the demand for houses, but reluctance of most homeowners to sell, prices skyrocketed.

Builders could not respond fast enough. With COVID rampant, experienced workers could not be found. Supplies were exhausted and inventories drained. Prices of all sorts of goods needed by builders and their vendors (such as timber) reached or exceeded old peaks.

Higher home prices meant higher home equity, giving more borrowing power to people with jobs. Additionally, middle income consumers were ready to spend cash sent from the government to stimulate the economy. Plus, unprecedented low interest rates made mortgages more bearable and loans for cars, furniture and other goodies more accessible.

The year 2020 spilled over into 2021. Orders backed up as suppliers couldn’t supply enough. Folks who never thought about them suddenly understood supply chains. At railroad grade crossings, we watched freight trains of 100-plus cars roll by, knowing even all those shipping containers were not enough to satisfy all we wanted.

Now the newsreaders can huff, and the cable pontificators can puff about inflation. “Wicked inflation” caused by “too much money” sent to consumers by a government successfully providing what voters wanted, a more vigorous economy. “Unjustified inflation” caused by consumers consuming and suppliers attempting to support those demands.

The years 2020 and 2021 were the down and up rollercoaster years. As we step off into 2022, we’re a bit dizzy. Not enough citizens and politicians yet realize our nation has underinvested in research, education, public health, and infrastructure.

Once again, consumerism has trumped common sense.

Morton Marcus is an economist. Reach him at [email protected]. Follow his views and those of John Guy on Who gets what? wherever podcasts are available or at Send comments to [email protected].