22 LONGISLANDPRESS.COM • JANUARY 2022
WHY INFLATION ISN’T ALL THAT BAD
continued from page 21
There really is a silver lining to the
infl ationary cloud hanging over the
country. Wages are rising, even if
they’re not always keeping pace with
infl ation. And infl ation brings other
benefi ts as well, even if it may be a net
negative.
“There are very few winners from
infl ation, because it can more broadly
outpace any net fi scal gains that the
average person would experience,”
said Richard Murdocco, an adjunct
professor focused on urban planning,
land use and economic development at
Stony Brook University’s Public Policy
graduate program. “In general, any
perceived rising tides in pricing due
to infl ation alone are artifi cial, because
any additional dollars earned are simply
watered down.”
Still, infl ation does have some winners
or benefi ts. Civilian wages and salaries
rose 4.2 % for the 12 months ending
September 2021 aft er increasing 2.5 %
for the 12 months ending in September
2020. The Associated Press reported
wages for the three months ending
September 2021 rose the most in 20
years in “a stark illustration of the
growing ability of workers to demand
higher pay.”
Infl ation can be good news, depending
on which side of a transaction you fi nd
yourself. It can push up home prices,
while making houses more expensive
to build. “Inflationary pressures
make Long Island, which is already a
challenging environment for builders,
even more so thanks to increased costs
of materials, labor, and debt,” Murdocco
said.
A weaker dollar makes U.S. products
cheaper abroad, which can boost exports.
If you owe money, the bill can become
easier to pay as the dollar becomes
weaker. “Holders of longer-term fi xedrate
debts, such as a 30-year mortgage,
may benefi t in a very limited fashion,”
Murdocco added.
The extent of infl ation has become a major
factor, as the annual infl ation rate in the
nation reached 6.8% in November 2021,
according to the United States Bureau of
Labor Statistics. That’s the highest since
June of 1982 and the ninth consecutive
month above the Fed’s 2% target.
The U.S. Bureau of Labor Statistics says
infl ation is being driven by rising commodity
costs and demand, wage pressures,
and supply chain disruptions. It
comes as the economy essentially hits
a reset, aft er being shut down.
The Consumer Price Index rose 0.8% in
November, but when you break things
down, you see some huge jumps. Energy
costs were up 33.3% in November with
gasoline up 58.1% and food up 6.1%,
the biggest rise since October of 2008.
Excluding food and energy, infl ation
increased 4.9%, the highest since June
of 1991, but only slightly higher than
rising wages.
Infl ation doesn’t mean the economy
is weak, amid many signs of strength.
Both Nassau’s and Suff olk’s not seasonally
adjusted unemployment rate was
4.0 percent in October 2021, compared
to 6.0 percent in New York State and
4.3 percent nationwide. The number
of private sector jobs on Long Island
increased over the year by 16,500, or
1.6 percent, to 1,058,900 in October, according
to the New York Department
of Labor. The stock market has been
strong, putting more money in many
people’s wallets or brokerage accounts.
Infl ation, however, can be perceived as,
if not a tax, a force depleting purchasing
power. Few people fi nd it humorous
when they pay more for the same product
or service than they did a month or
a year ago. Will Rogers, where are you
when we need you? And rising costs beg
the question as to whether and how the
Fed and government will react, even if
comedians may fi nd some fodder for
humor.
“For policymakers, the challenge will
be blunting the impacts of infl ation
while at the same time maintaining
private sector investment and public
environmental protections,” Murdocco
said. “While the localities are currently
fl ush with cash from the federal government,
this money won›t last forever.”
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