Inflation’s hit to a Southern Californian’s checkbook hasn’t been this hard in 31 years — a time when “Home Alone” was a blockbuster hit and George H. W. Bush was president.
Consumer prices in Los Angeles and Orange counties rose at a 7.6% annual rate in March, according to the Bureau of Labor Statistics. Everything from gasoline and household fuels to used cars and appliances and even recreation got really expensive. Inflation has risen a long way from 1.5% in December 2020.
These cost jumps are by no means just a local phenomenon. Nationwide inflation hit 7% in December — the highest rate since 1981. In Phoenix, inflation was 9.7%, and in Seattle 7.6%. The Bay Area’s cost of living was relatively mild, up only 4.2%. Inland Empire inflation, measured back in November, was 7.9%.
A curious mix of pandemic forces is powering this inflationary rush. The economy is struggling to deal with persistent coronavirus strains, which has led to shortages of workers and raw materials. Shoppers are weathering thinly stocked shelves and delivery delays due to supply chain challenges.
On the flip side, demand for goods and services has soared because consumers are flush with cash. Hiring sprees are pushing up wages. Government stimulus programs sent taxpayer checks and cut interest rates, in turn, boosting the values of stocks and real estate.
December’s rate spike came in a year in which inflation averaged 3.8%. That was more than double 2020’s 1.6% rate in a pandemic-iced economy. During the economically strong 2016-2019 period, the rate averaged 2.9%. In the Great Recession recovery of 2009-15, it was 1.2%. Note that in the infamous bubble-era — 2000 to 2008 — inflation averaged 3.4% in L.A.-O.C. and costs grew 2.6% in the slower-growth 1990s.
Inflation vs. jobs
Rising inflation is typically the byproduct of a hot economy experiencing heavy hiring.
A sharply rising cost of living strangled the economy in the late 1970s and early 1980s, but inflation also neared today’s heights in the booms of the late 1980s and the 2000s. Let’s look at the CPI and its relationship to the job market.
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