Sargassum seaweed blob headed toward Florida, the Caribbean ...

Beachgoers in Florida and the Caribbean could be greeted by heavy blankets of smelly seaweed in the weeks ahead as a 5,000-mile swath of sargassum drifts westward and piles onto white sandy beaches.

Sargassum, a naturally occurring type of macroalgae, has grown at an alarming rate this winter. The belt stretches across the Atlantic Ocean from Africa to Florida and the Yucatan Peninsula and is as much as 200 to 300 miles wide.

"This year could be the biggest year yet," even bigger than previous growths, said Brian Lapointe, an algae specialist and research professor at Florida Atlantic University's Harbor Branch Oceanographic Institute.

The belt is already beginning to wash up in the Florida Keys and Barbados and elsewhere in the region, but researchers don't know where the bulk of it could wind up.

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The monstrous seaweed bloom is just one more example of a growing global invasion of macro and microscopic algal blooms thriving on an increasing supply of nutrients such as nitrogen in freshwater and marine ecosystems.

What is causing the algal blooms?

In addition to the unsightly piles of sargassum along the coast, some species produce toxins that affect the food chain or deplete the oxygen in the water when they start to decay, causing fish kills and the die-off of other marine species.

Here's what to know:

Cause: The algal blooms are linked to human activities, such as lawn fertilizers, wastewater and agricultural runoff, that increasingly send pollutants into rivers, lakes and oceans.

The algal blooms are linked to human activities, such as lawn fertilizers, wastewater and agricultural runoff, that increasingly send pollutants into rivers, lakes and oceans. Key quote: "These nutrients are the common thread that ties all the algal blooms together," whether it's sargassum, red tide, or blue green algae, Lapointe said. It's also linked to the "brown tide" bloom in Florida's Indian River Lagoon that has been blamed for killing thousands of acres of seagrass, leading to the starving deaths of hundreds of manatees.

"These nutrients are the common thread that ties all the algal blooms together," whether it's sargassum, red tide, or blue green algae, Lapointe said. It's also linked to the "brown tide" bloom in Florida's Indian River Lagoon that has been blamed for killing thousands of acres of seagrass, leading to the starving deaths of hundreds of manatees. Looking ahead: Such algal blooms are expected to occur more often and cover larger areas of the globe, potentially harming other aquatic ecosystems, fisheries and coastal resources, reported a group of international researchers in a coastal phytoplankton study published this month in the journal Nature.

Not all algal blooms are bad. Many can occur naturally and can have positive effects.

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Isn't sargassum naturally occurring?

Yes. Christopher Columbus wrote about floating mats of it in the Atlantic Ocean.

"It's not a bad thing to have the sargassum in the ocean," said Brian Barnes, an assistant research professor at the University of South Florida in Tampa. Sea turtle hatchlings swim from Florida beaches to the Sargasso Sea in the Atlantic, where they spend their early lives floating and foraging in the grass.

"If it all stays offshore, we wouldn't really have a problem," Barnes said. But the macroalgae has mushroomed in size over the past 12 years or so, which makes it more likely to see large piles of seaweed that make it difficult to walk, sit or play on beaches.

The trend was first documented on satellite in 2011.

In some cases, there's so much seaweed that local governments must use heavy equipment and dump trucks to haul it away, LaPointe said.

He has linked the surge in sargassum to flow from the Mississippi River, extreme flooding in the Amazon basin, and the mouth of the Congo, where upwelling and vertical mixing of the ocean can bring up nutrients that feed the blooms. He said deforestation and burning also may contribute.

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Phytoplankton blooms increasing in size and frequency

Blooms of much smaller algae – a microscopic species known as phytoplankton – increased in size and frequency around the world from 2003 to 2020, the researchers concluded in the Nature study.

"We’ve seen something pretty similar in a lot of the things we study," Barnes said. "We’re seeing such massive blooms now."

The coastal phytoplankton study, by researchers at the Southern University of Science and Technology in China and elsewhere, used images from NASA’s Aqua satellite. They found:

Blooms affected more than 8% of the global ocean area in 2020, a 13.2% increase from 2003.

Bloom frequency increased globally at a rate of nearly 60%.

Europe and North America had the largest bloom areas.

Africa and South America saw the most frequent blooms, more than 6.3 a year.

Australia had the lowest frequency and smallest affected area.

Is climate change affecting algae blooms?

Blooms have been at least indirectly linked to climate change in several ways, but especially to the warming temperatures that bring more extreme rainfall that washes silt and pollutants into waterways.

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The authors of the coastal phytoplankton study, Lapointe and other researchers have found:

A correlation in some regions between changes in sea surface temperatures and ocean circulation.

Warmer temperatures coincided with blooms in high latitude regions such as Alaska and the Baltic Sea.

Climate change can affect ocean circulation and the movement of nutrients that feed phytoplankton blooms.

Global climate events, such as El Nino, also show connections to bloom frequency and movement.

Algal-bloom-favorable seasons in temperate seas have increased with warmer temperatures.

Where will the sargassum pile up this year?

"We can't really say which particular beach at which particular time," Barnes said. The university publishes a regular update on the status of the bloom.

"We can get an idea of when it will be fairly close," he said. "In general, everything flows west. It will come across the Central Atlantic and into the Caribbean, and into the Gulf of Mexico through the straits of Florida."

Winds, currents and even small storms can influence where the sargassum moves.

Puerto Rico and the U.S. Virgin Islands could get hit hard, Barnes said. But the floating mats also wind up on beaches in Jamaica and all around the coast of Florida.


Grocery store prices aren't coming down anytime soon | CNN Business

New York CNN Business —

Some sobering news for US shoppers: There’s little relief in sight on grocery store bills.

Grocery prices climbed 13.5% in August from the year before, the highest annual increase since March 1979, according to government data.

Executives at large food manufacturers and analysts expect inflation to hover around this level for the rest of 2022.

Next year, the rate of food inflation is expected to moderate — but that doesn’t mean prices are going to drop. Once prices hit a certain level, they tend to stay there or go up, but rarely down.

A number of factors have contributed to the surge in prices. Producers say they’re paying higher prices for labor and packaging materials. Extreme weather, like drought or flooding, and disease, like the deadly avian flu, have been hurting crops and killing egg-laying hens, squeezing supplies.

Even if some of these situations stabilize, it will take a while for those changes to reach consumers.

“There’s a lot of uncertainty,” said David Ortega, food economist and associate professor at Michigan State University. It’s not clear when the war in Ukraine will end, or how weather will impact crops in the future. “That’s one of the reasons why prices take longer to come down.”

Producers aren’t “seeing any end to inflation in terms of their labor and commodities cost,” said KK Davey, the president of client engagement at market research company IRI. The firm expects food inflation to rise between 5% and 10% next year.

Meanwhile, demand is high. Consumers may be able to pull back on some discretionary items, but they have to eat. And paying higher grocery prices may still be cheaper than dining out at restaurants, where menu prices are also rising (though at a slower clip). And many people are still working from home and consuming more of their meals there.

This imbalance means companies can pass along higher prices to shoppers without sales plunging.

“The cycle will break when supply is high and demand moderates,” said Davey.

Companies continue to raise prices

“We do expect the near-term inflation to remain high,” Mondelez (MDLZ) CEO Dirk Van de Put said on an earnings call this summer. The maker of Oreo and Ritz said that its energy, transportation, packaging and raw materials costs remain elevated, and it announced further price increases to offset those increases.

General Mills (GIS), which makes everything from Cheerios to Blue Buffalo pet food, expects that its costs will increase by 14% to 15% for its 2023 fiscal year, led by a rise in prices of ingredients such as nuts, fruits and flavors. The company is planning additional price hikes for its retail customers.

For now, consumers haven’t balked at the higher prices, noted CEO Jeff Harmening during a September earnings call.

Cereal maker General Mills is predicting higher cost inflation next year. Brandon Bell/Getty Images

“So far, we haven’t seen really any change in elasticities, which for us was a positive in the quarter,” he said. Elasticity refers to how easily customers change their shopping behavior in response to higher prices. Consumers accepted the higher prices more than General Mills would have expected, Harmening noted.

Between costs continuing to rise and people continuing to buy, there’s little reason for companies to discount their products.

“We think the risk of promotions ramping up significantly over the next couple of quarters is quite low,” Harmening said during the call.

For manufacturers to increase promotions, supply chain disruptions would have to end and costs would have to fall significantly, he said. “We don’t see any of those things.”

Why grocery prices are so sticky

In general, prices tend to go up over time. Government data shows that from 1974 to 2021, grocery prices dropped only during two years. Every other year, they went up, though some years the increase was very slight.

“There’s always a general increase in prices overall,” said Ortega, the food economist. “That’s just the nature of the economy.”

Typically, however, grocery prices go up about 2% or 3% a year, he said — far slower a pace than the increase happening now.

In the past, consumers may not have noticed higher prices because their wages kept pace with the increases. Right now, that’s not the case.

“Consumer prices are increasing faster than wages are increasing,” he said. “What we’re seeing now is really a cost of living crisis.”

Grocery prices in particular are sticky also because of how much of a hassle it is to change them.

When food manufacturers raise prices for retailers, those retailers don’t necessarily pass prices along to consumers. Some may opt to keep prices low — if they can afford it — to attract customers into the store.

Retailers also don’t like to raise prices little by little because it frustrates consumers, said Andy Harig, vice president of tax, trade, sustainability and policy development at FMI, a food industry association.

“A lot of people shop every week … and there’s lots of consistency in what they buy,” he said. So when prices change, even slightly, “they really notice that, and feel those changes.”

When retailers do switch prices in stores, they have to print out new labels and enter the new values into their sales systems. Stores carry tens of thousands of different items, so when prices go up across different categories, making adjustments becomes a ton of work.

That means that “when you do see increases happen, they tend to stay in place,” Harig said.

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Biden's victory lap marred by stock slump on inflation fears | CNN ...

CNN —

It was an unfortunate moment for Joe Biden to be celebrating.

The President staged his latest victory lap on Tuesday for the health care and climate law that Democrats hope will boost enthusiasm ahead of the midterm elections in November that could make him a domestic lame duck.

But the crowd on the sun-baked South Lawn of the White House cheered the controversially named Inflation Reduction Act only hours after punishing new government data showing food prices soaring. Stocks were meanwhile plummeting in the Dow Jones Industrial Average’s largest one-day reverse since June 2020 in the darkest days of the pandemic.

The slump came on the back of new figures that showed inflation still a corrosive force in August, despite big falls in gasoline prices. All this probably means more aggressive action from the Federal Reserve next week to curb inflation amid fears the central bank’s harsh medicine could throw the economy into recession and cool a strong job market.

Behind the scenes, as Biden marked what once seemed an unlikely legislative victory, his team was working frantically to avert a freight rail strike that could break out on Friday. A stoppage would be a disaster since it could cost several billions of dollars a day and further clog supply chains that already contributed to the rising inflation that have hurt so many Americans this year. Food shortages could occur, sending prices of staple goods soaring once again.

Presidents often cannot control the economy’s trajectory, but it was an inopportune matter of scheduling that Biden was on Tuesday thumping Democratic chests on a bill that pours hundreds of billions more dollars into an already overheating economy.

Past the poor optics, the new storm clouds underscored the tenuous nature of signs of slowed inflation that have contributed to a late summer spurt of political momentum for Democrats ahead of elections in which they’re trying to hold into their narrow House and Senate majorities.

And yet, on a day when disappointing economic data would seem to provide Republicans an opportunity to hammer home their attacks on Democrats over inflation, they were distracted by their own abortion politics after South Carolina Sen. Lindsey Graham unveiled a bill to ban the procedure after 15 weeks. Abortion has put Republicans on the defensive in the wake of the publicly unpopular Supreme Court decision overturning Roe v. Wade, and the lukewarm reception Graham’s proposal received from Minority Leader Mitch McConnell spoke to how electorally toxic it might be.

Sunny days for the economy remain elusive

Tuesday’s data highlights the fragile foundation of an economic recovery from a once-in-a-century pandemic that does have undeniable strong points for Biden to highlight, but that also leaves far too many Americans facing real pain.

The President on Tuesday conjured a political message suggesting a national and a personal political resurgence after a dark time, mirroring the sentiments sung by his warm-up act James Taylor: “I’ve seen fire and I’ve seen rain.” Despite the upbeat mood, however, the country seems far from the “sunny days that I thought would never end,” also evoked in Taylor’s hit.

Still, Biden hailed this summer’s Inflation Reduction Act and the infrastructure deal he signed last year as huge wins for serious legislators over special interests and an example of how competent government could work for every US citizen.

“Today offers proof that the soul of America is vibrant, the future of America is bright, and the promise of America is real,” he said.

Senate Majority Leader Chuck Schumer, a New York Democrat, drove home the political point, declaring, “Not a single Republican joined us to make these new investments in new jobs possible, not one.”

The mood of optimism in the White House was born out of what looked for months like a failed Biden agenda. The President’s roster of achievements on Capitol Hill now stands in favorable comparison with most recent administrations as midterm elections, which are traditionally troublesome for first-term commanders in chief, approach.

Some polls are showing Democrats ticking up in the generic congressional ballot ahead of November, and expectations for an overwhelming red wave have been tempered amid a shifting political landscape following the Supreme Court’s abortion decision. And yet the unpredictable nature of the economy, which is pumping out jobs but remains deeply challenging for many Americans, means it may still be hard for Democrats to beat the historical odds of the party in power losing seats during a first-term president’s midterms.

Inflation barely slows

When the Inflation Reduction Act passed last month, after months of wrangling between progressives and moderate Democratic Sen. Joe Manchin of West Virginia, there was a fierce debate over whether it would live up to its name.

The White House insists it will do exactly what it says it will because it will, for example, lead to lower prescription drug costs for seniors. But most analysts argue that any such deflationary effects will unfold in the long term. Certainly most Americans will not see much impact before they cast their votes in November, or before as early voting begins in many states in the coming weeks.

The White House pointed to progress in Tuesday’s inflation report. It’s true that while prices were up 8.3% year on year, they dipped down from an 8.5% hike in July and a 9.1% spike in June.

“Overall, prices have been essentially flat in our country these last two months: that is welcome news for American families, with more work still to do,” Biden said in a statement. But that was a rather selective reading of a report that showed just how high the burden is of near 40-year highs in the cost of living. In fact, food prices spiked 11.4% over the past year, the largest annual increase since May 1979, according to the Bureau of Labor Statistics data. Egg prices soared 39.8% from a year ago, flour is 23.3% more expensive. Milk is up 17% and bread jumped 16.2%. Rents, medical care and new cars are all more pricey than they were a year ago.

Such figures explain why inflation is such a pernicious force – everyone feels it, and it hammers the poorest Americans disproportionately. No amount of statements that things are getting better from Biden will alleviate disillusionment that voters will feel in the aisles of their grocery stores, even if gas prices have been falling almost every day for weeks.

The disappointing inflation report helps explain why stocks tanked on Tuesday amid rising investor concern that the Fed could overcook its response – with another 75-basis-point hike in interest rates expected next week – and tip the economy into a contraction. The Dow dropped 3.9%, the S&P 500 was off 4.3% and the Nasdaq fell 5.2%. Stock prices often rebound quickly, but such huge one-day slumps are unsettling for Americans with their pensions invested in the market. And they further chip away at confidence in the economy that can be reflected in voting patterns come Election Day.

Renewed concern over inflation also comes as anxiety mounts over another possibly politically significant shock to consumers. CNN reported this week that some White House officials worry about a consequential rise in energy prices for Americans this winter, as Russian President Vladimir Putin crimps the supply of natural gas to Europe as part of the new Cold War-style showdown caused by the West’s opposition to his invasion of Ukraine.

Rail strike threat

As if the current economic conditions weren’t challenging enough, the administration is battling to stave off a new threat – a strike on the nation’s freight rail network that could occur as soon as Friday if no agreement is reached.

Biden and White House officials have been burning up phone lines to union leaders and industry chiefs to stave off the industrial action that the Association of American Railroads predicts could cost more than $2 billion per day and lead to food and agricultural shortages, manufacturing shutdowns and job losses. A strike would be another blow to supply chains that ground to a halt in the pandemic and contributed to the rise in inflation. The freight rail network plays a critical yet often unnoticed role in American life. In a letter to members of Congress this week, the American Trucking Associations warned that a freight shutdown would require an extra 460,000 trucks – an impossible goal – to move goods by road, especially given the current shortage of 80,000 drivers.

The dispute puts Biden in a tough position, creating a conflict between his longstanding support for unionized labor and his immediate political imperative to avoid any other disastrous hits to the economy with elections in less than two months. The White House confirmed on Tuesday that the President spoke to both rail unions and freight companies the day before while visiting Boston. Union officials and representatives of the railroads are headed to Washington, DC, on Wednesday to meet with Labor Secretary Marty Walsh, CNN reported Tuesday evening.

More than 60,000 rail freight workers could walk off the job on Friday if they cannot secure certain quality of life benefits and changes to a rostering system that requires engineers and conducts to be constantly on call to work.

Biden headed off a strike two months ago by imposing a 60-day cooling-off period during which a panel he appointed made recommendations for pay rises. But that period ends at 12:01 a.m. ET Friday, ending the President’s power to block strike action. Congress would be able to intervene but Democrats and Republicans would have to find rare agreement on what to do.

Politically, Biden can ill afford any more major economic disruption. And Americans more broadly have suffered so much already over the last few years.

But the freight dispute, and the one step-forward-two-steps-back nature of the economy after a tumultuous period, show that the organizing principle of Biden’s presidency – restoring the country to normal – remains a huge challenge. And they show just how quickly things could fall apart.

Milk prices: Why you could be paying 50% more this year | CNN ...

Prices are rising at the fastest pace in decades, creating a cost-of-living crisis that’s forcing people around the world to make tough choices about what to buy.

The United Kingdom is no exception: inflation hit a 40-year high of 9% in April and is forecast to peak above 10% toward the end of this year. The high cost of fuel and heating is just part of the problem. Food prices have also leaped, climbing nearly 7% compared with a year ago, according to data released Wednesday.

A big part of the problem is the soaring price of dairy products. The cost of milk, cheese and eggs — supermarket staples — shot up 9.5% in the 12 months to April. The price of whole milk rose more than 12%.

In the United States, wholesale milk prices jumped 38% last month year-over-year, while the retail price of fresh whole milk was up 15%.

There could be more pain to come, according to a recent analysis by Kite Consulting, which specializes in the UK dairy industry. Between 2020 and 2021, a standard four-pint carton of milk cost between £1.10 ($1.36) and £1.20 ($1.49). This year, it could reach £1.70 ($2.11), the consultancy said. That would mark an increase of more than 50% from the bottom end of the range.

Why the dramatic spike? It partly comes down to supply and demand. Covid-19 drove up the price of many goods as lockdowns distorted global supply chains. This weighed on milk production, as farmers dealt with more expensive fertilizer and animal feed as well as new environmental rules. Meanwhile, the appetite for dairy products, especially in developing countries, grew during the recovery.

Then came the invasion of Ukraine, which further scrambled access to products like wheat, fertilizer and fuel, hiking costs for dairy farmers once again.

“The war is the thing that’s causing the major problem at present,” Kite Consulting managing partner John Allen said.

A customer shops for food items inside a Tesco supermarket store in east London. Daniel Leal/AFP/Getty Images

The price of fertilizer

One of the biggest problems is the spiking price of nitrogen-based fertilizers, which are essential to dairy farming.

“If you look at April 2022 compared to April 2021, you see fertilizer prices almost four times where they were before,” Robert Craig, who runs three dairy farms in northern England with about 1,500 cows.

If farmers cut back on how much fertilizer they use, they can’t grow enough grass to feed their cows while they graze. A recent lack of rain in England is making the problem even worse.

Jessica Langton, who helps run a family farm in Derbyshire with 100 cattle, is concerned.

“We get the majority of our income from milk, so we need to be producing a large amount of grass to feed [cows] through the summer and the winter,” she said. Milk from her family’s farm is used to make cheddar cheese.

Langton noted that a lot of other farms also rely on fertilizer to grow wheat, maize and barley to feed their cows. If they can’t produce enough, they could be forced to sell some of the herd, either to slaughter or to other dairy farmers.

Fertilizer prices were increasing before the invasion of Ukraine because of a spike in natural gas prices last year. Nitrogen-based fertilizers like urea and ammonium nitrate are produced from natural gas.

The invasion of Ukraine made matters worse. Russia and its ally Belarus are major exporters of fertilizer, but few buyers want to touch their supply now. An estimated 18% of the UK’s urea comes from Russia and 7% of its ammonium nitrate, according to Independent Commodity Intelligence Services.

“Russia is such a big exporter of fertilizer, and they have so many sanctions,” said ICIS analyst Deepika Thapliyal. “That’s going to keep supply very tight.”

The price of fuel and animal feed

Energy prices aren’t just a factor in fertilizer production. Fuel is also essential to running a farm, where tractors and other machines can run for between 16 and 20 hours a day.

Langton estimates that the cost of the diesel her family uses has more than doubled compared to last year.

Heifers feed in a barn at a farm in Ashford, Kent. Dan Kitwood/Getty Images

The price of animal feed for cows, which supplements their diets, has surged, too. The UK’s National Farmers’ Union estimates that feed prices have climbed by 70% over the past two years.

Before the war, Russia and Ukraine accounted for more than a quarter of global wheat exports. But the disruption caused by Russia’s blockades at Ukrainian ports sent prices to an all-time high in March. They’ve since come down slightly but remain extremely elevated, rising again in recent days as India banned exports.

Wheat, along with maize and soy, serves as a benchmark for feed prices, Allen of Kite Consulting said.

Craig, the farmer, said that Ukraine produces the “vast majority” of feed for organic dairy cows in the United Kingdom. Now, that product is practically inaccessible.

How it shakes out

It’s not a given that grocery stores will hike milk and other dairy prices in line with dramatic forecasts. Stores are wary of raising the price of essential items too much, lest they scare away customers.

“Some retailers will be prepared to take a much lower margin, if not potentially small losses, [to] make [sure] people come through the door,” said Tom Holder, a spokesperson for the British Retail Consortium. “No one wants to go to the supermarket that has the high-priced milk.”

But farmers like Langton and Craig worry that the dynamics hurting their businesses aren’t going away. Many have to contend with rising labor and transportation costs, too.

“There’s literally nobody to employ. You advertise jobs and there’s very little response,” said Craig. Two of his farms produce milk for cheese. Milk from the third farm is dried and used in a cappuccino mix made by Nestlé (NSRGY).

Kite Consulting estimates that total costs of production for dairy farmers will rise by 29% from 2021 to early 2023. Government subsidies, meanwhile, are dropping, making it even harder to break even.

“If we don’t see the milk price increasing alongside hyperinflation, we could see a lot of dairy farms exiting the industry across the UK,” Langton said, referring to the price at which her family can sell its milk to processors.

Rising food costs will hit poorer households the hardest. About a quarter of Britons have already skipped meals in response to the cost-of-living crisis, according to a survey published by Ipsos this week. That number rises to one in three for people with lower incomes.

David Beasley, head of the United Nations World Food Programme, has warned that rising food prices will cause social unrest in some parts of the world.

As prices are pushed higher to help farmers stay in business, demand is expected to begin to fall off, allowing the market to rebalance itself. But when that moment will arrive remains an anxiety-inducing unknown.

“I don’t think it’s too expensive yet,” Kite Consulting’s Allen said.

Here's how Republicans would address inflation | CNN Politics

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CNN —

Life is more expensive, which means everyone has gotten a pay cut. And people are not happy about it.

Still-high gas prices. High rents. The cost of service. It’s all having a cumulative effect. And wage hikes haven’t kept pace with inflation.

$1,000 for a day at Disney. A more specific example that affects people fortunate enough to consider a vacation is the fact that a family of four will now spend more than $1,000 for a single day parking their car and park hopping at Disneyland. And that’s before food or souvenirs, according to CNN’s Natasha Chen.

Tide turning. Aggravating and persistent inflation that refuses, so far, to be tamed by interest rate hikes, remains a motivating force in American politics. And the sour economic mood is tilting the political landscape toward Republicans, according to CNN polling director Jennifer Agiesta.

“The nation’s overall political mood – which had been somewhat more favorable for Democrats following the Supreme Court’s overturning of Roe v. Wade – may be tilting more in Republicans’ favor,” Agiesta writes.

What would Republicans do? It’s worth considering how the economy will be different with Republicans in charge of the House or Senate.

Republicans on the campaign trail have tried to capitalize on the ongoing sticker shock and laid primary blame for inflation on government spending, an argument that overlooks the energy spike caused by Russia’s war on Ukraine and the supply chain issues caused by the lingering Covid-19 pandemic.

Here’s an extended riff from Minority Leader Kevin McCarthy – who is in line to be speaker of the House next year if Republicans win in November – when he appeared on Fox on Tuesday:

“Every American needs to be asked this one question: ‘Could you afford to give up one month of your wages?’ Ninety-five percent of Americans will say no. But that’s what the Democrats have taken from you. Because one month of your wages is 8.3% of your overall year – inflation is higher than that.

That’s why when you go to the store, eggs are higher. You‘ve got milk higher, your gasoline prices higher. It is the Democrat policies that brought that. That’s why in the Commitment to America, we will be energy independent, that lower your prices. We’ll take away this runaway spending. We’ll make America more productive to curve inflation, what the Democrats have brought us.”

That’s the pitch. Can they deliver?

Controlling the House and/or Senate would certainly give Republicans the ability to squash any more spending pushed by the Biden administration. And for an idea of what they support, check out McCarthy’s Commitment to America website. It contains few specifics, but has three basic tenets:

“Curb wasteful government spending …”

Enact “pro-growth tax and deregulatory policies …” (cut taxes and regulations)

“Make America energy independent …” (specifically through oil and gas production)

Regarding the tax and regulation ideas, those are longer-term ideas since they would require a Republican president.

A fourth promise to end reliance on China and ease supply chain problems does not include specific policy ideas.

President Joe Biden, for his part, has partially wrapped independence from China and building up US manufacturing into his climate policy, and on Wednesday announced $2.8 billion in grants for US battery supply chains under authority from the bipartisan infrastructure law that passed last year.

How far could Republicans go to cut spending?

McCarthy has suggested Republicans will go further and even use the debt ceiling, which will likely be reached early next year, as leverage to force spending cuts. It’s a more overt endorsement of the tactic, which would theoretically see the US default on its obligations.

For an assessment of what Republicans can and would be able to accomplish on inflation, I talked to Douglas Holtz-Eakin, an economist and president of the American Action Forum, a nonprofit organization that does not endorse policy positions but has a center-right viewpoint. He’s a former director of the Congressional Budget Office and was the economic policy adviser to Sen. John McCain’s 2008 presidential campaign, but he’s not affiliated with either party.

Controlling inflation is primarily the Fed’s job

The first thing to know, Holtz-Eakin said, is that the primary job of controlling inflation belongs to the Federal Reserve, not Congress or the White House.

However, he’s of the opinion – along with other economists like the Democrat Larry Summers – that government spending, and in particular the American Rescue Plan Act passed without help from Republicans shortly after Biden took office, helped drive inflation.

“Not committing the same mistake is something Republicans can control, there’s no doubt about it,” he said. “They can block things if they control the House, and that would be beneficial” to curb spending.

The proof that spending helped spur inflation

While Holtz-Eakin said it is not accurate to say Biden and Democrats created the inflation, they certainly helped accelerate it.

“It’s quite clear in the data that there’s a sharp ramp up of inflation in April of 2021 immediately as the checks go out, to implement a $2 trillion stimulus in our economy,” he said.

What about using the debt ceiling as leverage to cut spending?

“We’ve seen this movie a million times before,” Holtz-Eakin said, rattling off various ideas that have been put forward to control deficit spending and the national debt.

“People have talked on both sides of this forever, and there hasn’t been one difference in the outcomes,” he said. The debt has gone up steadily. It is currently set at nearly $31.4 trillion. At some point, he argued, someone is going to have to get serious about making fiscal policy more sustainable.

Cutting spending is contrary to Congress’ nature

While the American Rescue Plan never would have happened if Republicans had been in control of the House, Holtz-Eakin also said something important about how even when there are promises to cut spending, spending occurs.

“On the whole, Congress tends to spend more and tax less and run deficits,” he said. “On the whole, it’s directionally always more inflationary than not.” But a GOP majority would certainly lower the magnitude of spending, he said.

A recession might be on the way no matter what

There are more and more predictions of a recession as the Federal Reserve tries to tamp down on inflation by raising interest rates.

“Once inflation is there, you have nothing but bad choices,” Holtz-Eakin said. “You have to raise rates and tighten financial conditions. That means fewer jobs and less retail sales, fewer housing starts and all sorts of bad decisions.”

Those decisions are being made regardless of who sits in the House and Senate.

“Ownership of the economy usually falls to the president, who gets blamed or gets credit for what happens on his or her watch,” he said.

What’s Biden doing?

The President tried again Wednesday to put even the smallest dent in gas prices with the formal announcement of yet another release from the Strategic Petroleum Reserve – 15 million barrels in December – although it’s unlikely to have much impact.

The rest of the government is trying to do its part to ease the burden of inflation too:

That said, none of those measures will likely make Americans feel very different about the economy before Election Day.

Opinion: Surging food prices are hurting those who can least afford it ...

Editor’s Note: Dana Peterson is an executive vice president and chief economist at The Conference Board. The opinions expressed in this commentary are her own.

Prices are rising for nearly everything, biting into everyone’s income. But the surging cost of food, specifically, hits especially hard, exacerbating the wealth and income disparities between the richest and poorest Americans.

The Federal Reserve has been patient throughout the Covid-19 pandemic about achieving full employment to help the broadest set of Americans. Now, it is pivoting toward fighting inflation. This shift is critical to help tame higher prices in virtually every category and will require a measured and well-communicated plan to raise interest rates.

One of the more closely watched categories is food, as soaring prices have hit consumers’ pocketbooks, especially those least able to afford it. Food prices in December 2021 increased by 6.3% from a year earlier, according to the Bureau of Labor Statistics’ (BLS) Consumer Price Index. This is the fastest pace of food-price inflation since October 2008, when swelling energy prices lifted the cost of other commodities.

Now, pandemic dynamics are driving inflation: sick workers, supply chain disruptions, transportation bottlenecks and labor shortages, not to mention bad weather events, have forced the price of food higher. Food consumed at home is up 6.5% year-over-year, with prices for staples like meats, poultry, fish and eggs spiking by 12.5% year-over-year. Fruit and vegetable prices climbed to a 10-year high (5%) in December. Food in restaurants, too, is up 6% year-over-year. And prices for full- and limited-service meals and snacks (i.e., dine-in restaurants and takeout) have risen at the fastest pace on record, according to BLS data.

These levitating prices exacerbate food insecurity. According to the Census Bureau’s Household Pulse Survey, 42 million Americans said in early January that they lacked sufficient food because they couldn’t afford to buy enough. That number is nearly double what it was in April as prices rose and stimulus payments (e.g., checks, enhanced federal unemployment insurance) dwindled or ended.

Food-insecure families tend to have incomes below the poverty line of $26,500 for a family of four, but those with incomes just above it or in the lower middle class are also feeling food pressure. Additionally, ethnic minority groups (Black 17%, Hispanic 15%) are more likely than their White (6%) peers to cite food insecurity, according to The Conference Board’s calculations of the Census Bureau’s Household Pulse Survey.

In a modern economy, no one should struggle to eat because of spiking food prices.

Still, we could see prices rising even further. US CEOs see rising inflation as their second greatest externally facing concern for the year ahead, after labor shortages, according to The Conference Board C-Suite Outlook 2022 survey. An outsized 74% said they are facing upward pricing pressures for inputs (e.g., raw materials, other supplies, wages), with 66% blaming supply chain bottlenecks for higher costs, and 50% citing labor shortages as causes.

When asked how they would manage these rising costs, 56% of CEOs said that passing price increases on to customers would be their first choice. Only about one-third stated that they might absorb prices into profit margins (36%) or cut costs (32%) as a first option. While these sentiments pertained to all goods and services, this is likely to be particularly acute for food producers and providers. As long as the lingering pandemic gums up supply chains and constricts the labor supply, firms may feel obligated to raise prices, especially for food.

Fed action is the key to any quick relief. Interest rate hikes will slow certain aspects of the economy, like housing activity, more intensely than others. But rate rises should also help calm inflationary pressures, especially as the temporary drivers of higher food prices, including supply chain disruptions, persist.

Raising interest rates from zero percent, and gradually reducing the size of the balance sheet, would also ensure that runaway prices, or even a wage-price spiral, do not damage consumers and hamstring businesses. Since the Great Recession, financial markets have been wary of the Fed’s attempts to tighten policy. Recall, for example, the taper tantrum of 2013 and the 2018 selloffs when the Fed attempted to “normalize” interest rates.

Now, though, financial markets should recognize that the Fed’s efforts to fight inflation are in their interest as they will stabilize the economy. Fed policymakers are signaling several interest rate hikes this year, and markets may become nervous after the first few. However, by using effective communication now, the Fed should seek to convince investors that its actions are not to be feared, but welcomed to keep the US economy on track and help many Americans whose spending is vital to continued growth.

Opinion Dana Peterson For Cnn Business Perspectives

Food stamps benefits to jump 12.5% starting in October due to inflation

CNN —

Come October, it will be a little easier for food stamp recipients to afford groceries.

Their monthly benefits are going up 12.5%, or $104 for a family of four, thanks to soaring inflation, according to the US Department of Agriculture. That brings the maximum benefit for this size household to $939 a month, up from $835.

Benefit levels are based on the cost of the USDA’s Thrifty Food Plan each June, and the change takes effect in October.

This year’s cost of living adjustment is the largest annual percentage increase since the Thrifty Food Plan was developed in 1975 and stems from the massive jump in inflation since last year.

“It will put SNAP benefits better in line with the increase in the cost of food over the past year,” Dottie Rosenbaum, director of federal SNAP policy at the Center on Budget and Policy Priorities, said of the Supplemental Nutrition Assistance Program, or SNAP, as food stamps are formally known.

Nearly 41 million people were enrolled in the food stamp program in June, according to the most recent USDA data. The average monthly benefit is just over $218 per person.

Grocery prices soaring

Even with this hefty adjustment, food stamp recipients are already falling behind since inflation has continued to rise since June.

Grocery prices jumped 13.5% in August, according to the most recent data from the Bureau of Labor Statistics.

Egg prices soared nearly 40%, while milk rose 17% and bread jumped 16%. The cost of chicken grew 16%, while fruit and vegetables together are up more than 9%.

The higher costs for food are putting a strain on many Americans’ budgets, including those who receive food stamps. Many are turning to food pantries to supplement what they buy in the supermarket.

Some 40% of food pantries and soup kitchens in the Feeding America network saw an increase in the number of people served in July compared with June, according to a recent survey conducted by the anti-hunger group. Another 40% said demand remained about level.

Some pandemic assistance is still in place – for now

Many food stamp recipients are still benefiting from a Covid-19 pandemic relief program that Congress enacted early in the outbreak. Lawmakers raised enrollees’ monthly food stamp allotment to the maximum amount for their family size – a minimum of $95 a month. Some 34 states and the District of Columbia still have this program in place.

A separate 15% boost to benefits ended a year ago.

Those receiving food stamps also received a major permanent increase in benefits last year when the USDA revised its Thrifty Food Plan formula. This resulted in a $36 per person hike in monthly allotments.

Food prices rising 2022: USDA predicts these grocery store increases

If you think paying $10 for a pound of bacon or $6 for a pound of butter is bad, it's about to get more expensive.

Pretty soon, you'll be paying even more for just about everything when it comes to eating in or dining out, according to the U.S. Department of Agriculture.

"All food prices are now predicted to increase," the USDA's Food Prices Outlook for 2022 March report said.

The increases are the highest in decades as grocery prices got more expensive and rose nearly 9% for the year.

The USDA's Economic Research Service updated its March report predicting a 4.5%-5% rise in food prices this year. Eating out will see the highest increase, 5.5%-6.5%, the report said.

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Grocery prices impacted by inflation

Grocery prices are expected to rise between 3% and 4% in the coming months. And that's on top of all the other increases consumers faced over the past several months.

No food category, the USDA said, decreased in price in 2021. And now the USDA revised its forecast upward for all food categories, including meats, poultry, eggs, dairy products, fats and oils, and more. The only category that the USDA revised downward was fresh vegetables.

Beef and veal had the largest increase and fresh vegetables the smallest. Prices for wholesale beef are predicted to increase between 4% and 7%.

Contributing to the higher retail poultry and egg prices, the report said, is avian influenza. Prices for poultry are predicted to increase by 6% to 7% and 2.5%-3.5% for eggs.

"An ongoing outbreak of highly pathogenic avian influenza could contribute to poultry and egg price increases through reduced supply or decrease prices through lowered international demand for U.S. poultry products or eggs," according to the report.

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Strong demand for dairy products is driving up retail prices. The USDA's outlook in 2022 for dairy predicts a 4% to 5% increase.

Also putting pressure on food prices is Russia's invasion of Ukraine and increases in interest rates by the Federal Reserve.

"The impacts of the conflict in Ukraine and the recent increases in interest rates by the Federal Reserve are expected to put upward and downward pressures on food prices, respectively. The situations will be closely monitored to assess the net impacts of these concurrent events on food prices as they unfold," the report said.

Inflation came in at 7.9% for the last 12 months — the highest year-over-year increase since April 1981, according to February's U.S. Consumer Price Index, released in March.

Follow Susan Selasky on Twitter: @SusanMariecooks.

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No more steak. Ordering out less. Here's how inflation is squeezing ...

John Harriger loves a good steak, but these days it's an expense he can no longer afford.

The 66-year-old Virginian has been living off Social Security since a work-related back injury in 1994. That’s $1,800 a month total for Harriger and his wife.

With grocery prices up 13.5% over the past 12 months and gas prices above $3.39 a gallon, Harriger has had to make cuts. He’s down to two meals a day instead of three – typically a peanut butter and jelly sandwich for lunch and trout for dinner if a friend had a good day fishing.

He filed for bankruptcy two months ago, which made his cost of living more manageable. Basic monthly expenses like groceries and electricity now cost him about $1,500 instead of $2,400, but he still worries.

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Price controls: Should the government control how much food and ...

London CNN Business —

People are paying a lot more for food, gas, cars and services, and inflation isn’t over yet as the pandemic continues to distort the economy. So should governments consider setting the price of essential goods?

It’s been done before, typically during times of crisis, but for most mainstream economists, the answer to this question is a resounding “no.” Limiting how much companies can charge will distort markets, they argue, causing shortages and exacerbating supply chain problems while only temporarily reducing inflation.

“Price controls can of course control prices — but they’re a terrible idea,” David Autor, a professor of economics at the Massachusetts Institute of Technology, remarked in a survey published earlier this month by the University of Chicago.

Asked whether price controls similar to those used in the United States during the 1970s could reduce inflation over the next year, less than a quarter of economists surveyed said they agree while nearly 60% said they disagree or strongly disagree.

“Just stop. Seriously,” Austan Goolsbee, a professor at the University of Chicago, said in response to the question. Goolsbee previously served as chairman of the Council of Economics Advisers under former President Barack Obama.

The attitude toward price controls appears to be similar in Washington, where policymakers have shown little enthusiasm for even targeted or temporary measures despite growing pressure on middle class families that feel the pain of price increases more than the rich.

Still, with annual inflation running at a four-decade high of 7% and midterm elections approaching, price controls could feature in future debates about how to reduce prices, particularly if actions taken this year by the Federal Reserve fail to tame inflation.

People shop for groceries at a supermarket in Glendale, California, on January 12. Robyn Beck/AFP/Getty Images

The problem with price controls

Price controls can be targeted or imposed on a broad range of goods, setting either a floor or ceiling. The German capital of Berlin, for example, has sought to limit how much rent landlords can charge tenants. In the United Kingdom, regulators limit how much consumers can be charged for energy and some types of rail fares.

Economists who are skeptical of price controls often point to basic economic concepts.

They argue that capping prices encourages companies to produce less of a product, while making it more attractive to consumers. Supply goes down, and demand goes up, with shortages being the inevitable result.

But that doesn’t stop governments around the world from resorting to price controls when inflation gets out of hand. As elections approached late last year in Argentina and annual inflation topped 50%, the government froze the price of over 1,000 household goods.

Last week, Hungarian Prime Minister Viktor Orban said he would cut the price of flour, sugar, sunflower oil, milk, pork leg and chicken breast ahead of a national election in April, according to Reuters. He also extended caps on energy, fuel and mortgages.

Isabella Weber, an assistant professor of economics at the University of Massachusetts Amherst, argues that price controls have a role to play in the United States, too, as policymakers try to address inflation caused by the extraordinary circumstances of the pandemic.

“Price controls would buy time to deal with bottlenecks that will continue as long as the pandemic prevails,” Weber wrote recently in The Guardian, adding that “the cost of waiting for inflation to go away is high.” One key to making the policy a success, she wrote, is to remove price caps gradually to prevent a rapid surge in prices.

Free market or price controls?

There is plenty of precedent for price controls in the United States, but you have to look a few decades back.

They were last deployed at the federal level during the 1970s, when former President Richard Nixon established a Cost of Living Council in the summer of 1971 and blocked most wage and price increases for 90 days. The policy was popular with the American public, and inflation slowed temporarily after reaching 5.8% in 1970.

But Nixon’s subsequent efforts to cap prices were much less successful. The Republican repeatedly tried to freeze prices during the next few years, but inflation surged to 11% in 1974 — exacerbated by the Organization of the Petroleum Exporting Countries (OPEC) declaring an embargo on oil shipments to the United States the previous year.

Nixon had worked early in his career as an attorney for the Office of Price Administration, which was established during World War II to impose price ceilings on rents and a wide range of products. The price controls were largely effective, but gave rise to a thriving black market. The agency was dissolved in 1947.

Limited price controls are also present in the US economy today. Some cities cap rents or the amount landlords can hike them each year, while government agencies limit the price that some monopolistic utilities charge.

Modern politicians tend to put their faith in the Federal Reserve’s ability to control inflation, but the central bank may struggle to address price hikes that are caused by supply chain issues resulting from the pandemic.

President Joe Biden has also taken some steps to combat rising prices by targeting corporations and using the power of his office. He has pledged to enforce antitrust laws and crack down on price fixing by meat processors, an industry that is controlled by just a handful of large firms. Biden has also released oil from the country’s Strategic Petroleum Reserves in a bid to reduce energy prices. Meat and energy are both significant contributors to inflation.

Price controls, it seems, are still a bridge too far.

Premarket stocks: Americans can't afford gas -- that's bad news for ...

New York CNN Business —

Gas doesn’t just fuel cars, it also powers Marlboros, Red Bull, and Doritos.

An estimated 80% of the fuel purchased in the United States comes from local convenience stores, which bring in about $475 billion of revenue each year, according to IBISWorld data. A quarter of that comes from the 44% of gas guzzlers who come into the store each time they hit the pumps to purchase groceries, snacks, beer and cigarettes.

So as Russia’s invasion of Ukraine and record-high inflation rates cause crude oil prices to shoot up, executives at PepsiCo, General Mills, and Conagra (the company behind Slim Jim) are biting their nails.

The national gas average price in the United States was about $4.10 per gallon on Wednesday, according to data compiled by AAA. While that’s a little bit under the record high, it’s still high enough to make 60% of Americans reconsider their driving habits and make some lifestyle changes, according to a survey by the automotive service company.

Less driving and fewer trips to the pump typically serve a double hit to convenience store retailers: a loss of foot traffic and money left for discretionary purchases.

“Our [convenience store] retailer contacts have recently highlighted some signs of strain on consumer spending as gas prices remain stubbornly high, with one retailer noting a slowdown in March in-store purchases across categories,” wrote Bonnie Herzog, managing director at Goldman Sachs, in a research note Wednesday.

Rising gas prices also appear to be weighing on packaged snack food sales. “This is evidenced by the slowing volume trend seen across most major snack food categories and outright volume declines for single-serve chocolate and jerky meat,” she wrote.

About 83% of purchases made at convenience stores are for immediate consumption, or impulse buys, typically the first thing to go when inflation increases.

“Anytime you sell immediate consumption and people’s pocketbooks are pinched you could lose sales,” said Jeff Lenard, vice president of strategic industry initiatives at the National Association of Convenience Stores.

First-quarter sales data from NielsenIQ underscore that fear. People are purchasing fewer items. “There is definite concern that the longer prices stay elevated, the more people could modify their behavior and not just short-term but long-term,” said Lenard.

Gas prices are top of Americans’ minds, said Jason Zelinski, director of convenience channel accounts at NielsenIQ. But they haven’t greatly impacted other sales yet. He noticed a shift toward increased visits to gas stations — people are topping off their tanks more frequently instead of paying for a full tank.

Consumer Edge, a data insights company, looked at the top three fuel retail brands in the US (Costco, Sam’s Club and Kroger) and noticed a spike in fuel sales as a percentage of total sales through the month of March.

“Although average fuel prices per gallon have gone up, some consumers can no longer afford to fill their tanks each trip and are making the same-priced transactions for fewer gallons but filling up more often,” they wrote.

And while there are certainly fears of an upcoming recession, unemployment remains at record lows. Americans are still driving to work.

Companies are already picking up on the increased frequency of gas visits and trying to use that to fuel other sales, said Eric Dzwonczyk, managing director at AlixPartners.

Walmart, Costco and convenience stores are tying product promotions or discounts to the purchase of gas in order to encourage store visits.

The cost of Germany’s reliance on Russian gas

For weeks, politicians, economists and everyone in between have been speculating about what a disaster it would be for Western Europe to lose Russian energy supplies. Now, we’re getting a sense of just how devastating it would be.

Germany’s top forecasters on Wednesday warned that the country would lose nearly $240 billion in economic output over the next two years, my colleague Anna Cooban writes. That would plunge the German economy into a deep recession and wipe out hundreds of thousands of jobs.

In the event of a shock to natural gas supplies from Russia, Germany’s GDP would rise by just 1.9% in 2022, and contract by 2.2% in 2023, researchers said in a report compiled by five German economic institutes.

That staggering figure underscores the geopolitical dilemma Western leaders face in confronting a petrostate as powerful as Russia. The military’s abhorrent violence in Ukraine has prompted EU officials to agree a phased ban on Russian coal. But its natural gas exports are a whole other story.

Germany, Europe’s biggest economy, imported nearly half of its natural gas supplies from Russia in 2020, using it to heat homes, generate electricity and power its factories. Losing that supply would drive inflation – already at its highest level in more than four decades — even higher.

Last week, German Finance Minister Christian Lindner said the country was moving “as quickly as possible” to ditch Russian energy, but he reiterated that the country couldn’t shut off supplies overnight.

“If I could only follow my heart, there would be an immediate embargo on everything,” he told the newspaper Die Zeit. “However, it is doubtful that this would stop the war machine in the short term.”

The best economy that no one likes

Ask just about any economist right now how the US economy is doing, and they’ll likely say it’s pretty solid. The labor market is incredibly strong, wages are rising, and even though inflation is high, it has either already peaked or will soon peak (and either way it’s still nowhere near as bad as it was 40 years ago).

But ask the same question to a regular person and they’ll likely say it stinks.

They’re both right.

Sure, inflation might be cooling off (emphasis on “might”) but try telling that to someone who’s been outbid for 10 different homes, is paying through the nose to fill up their car and gets anxiety just thinking about their weekly grocery bill.

Consider this: US home prices have skyrocketed 20% over the past years. Mortgage rates have nearly doubled in just a few months. And even if you’ve got the cash to afford a house, good luck finding one – inventory is at record lows, and builders are struggling to catch up amid high demand and still-unresolved supply chain bottlenecks.

Then there’s food. Over the past year, US groceries overall got 10% more expensive. It’s especially bad news for bakers when you single out the foods that have gone up the most: flour (14%), milk (13%), eggs (11%) and butter (14%).

Prices are surging everywhere: In the United Kingdom, the annual inflation rate surged to 7% in March, its highest level since March 1992. And China reported this week its producer prices were 8.3% higher in March.

On Thursday, we’ll get some more insight into how inflationary psychology is affecting the Mighty American consumer when the University of Michigan releases preliminary results from its April sentiment survey. Last month, consumer sentiment came in at its lowest level since 2011.

“Surging gas, food, and housing prices have forced nearly all families to go through the painful process of deciding which normally purchased items they could no longer afford,” wrote economist Richard Curtain, who oversees the survey, in a memo last week.

Part of the reason this bout of inflation feels as bad as it does, Curtains says, is because the majority of consumers weren’t alive, or at least weren’t paying the bills, in the inflationary heyday of the 1970s. We’ve grown up in low-inflation world, punctuated by a few short-lived oil price spikes.

“This lack of experience has magnified their reactions to the higher inflation rate that now prevails,” Curtain says.

Up next

Goldman Sachs (GS), Wells Fargo (WFC), Citigroup (C) and Morgan Stanley report earnings before the bell.

Also today: Preliminary data for the University of Michigan survey of consumer sentiment will be released at 10 am ET.

Coming tomorrow: US stock market closed for Good Friday. Bond market closes early at 2 pm ET.