(What’s Left of) Our Economy: U.S. Inflation Just Rebounded on the Wholesale Level, Too

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Biden administration, consumer price index, core inflation, CPI, Federal Reserve, food stamps, inflation, interest rates, monetary policy, Obamacare, PPI, Producer Price Index, Social Security, student loans, veterans, wholesale inflation, {What's Left of) Our Economy

After today’s official report on producer price inflation in the United States, it’s hard to see how anyone could still genuinely believe that the worst of the recent, decades-high price increases afflicting Americans is past.

In the first place, both versions of the Producer Price Index (PPI) worsened sequentially in September) for the second straight month. And in the second place, these results are likely to generate acceleration in consumer prices (those September figures come out tomorrow) because these “final demand” producer price (also called wholesale price) numbers tell us what businesses charge for the goods and services they buy to create what they sell to consumers.

It’s true that, at some point, U.S. businesses will lose this pricing power because their customers simply can’t afford to keep buying as much. But continuing strong inflation at all levels by definition makes clear that this development isn’t imminent. (Otherwise, price increases would have cooled much faster.)

Moreover, the Federal Reserve’s tighter monetary policy, which makes credit more expensive, isn’t likely for at least several months to slow economic activity enough to moderate inflation. And the Biden administration keeps putting more money in people’s pockets (e.g., in the form of a – scaled back – student loan forgiveness program, a major expansion of food stamp eligibility and Obamacare benefits, and higher spending on veterans benefits). Further, tomorrow Washington could announce the biggest increase in Social Security payments (which are indexed to inflation) in decades.

Overall producer prices rose sequentially by 0.38 percent in September. The monthly increase was the first since June, but keep in mind that it followed a July drop of 0.41 percent and a smaller August decline of 0.18 percent (hence my claim above of two consecutive months of discouraging results).

As with the consumer price index (CPI), the government also releases “core” producer price figures that strip out food and energy prices supposedly because their volatility has nothing to with the economy’s fundamental vulnerability to inflation. And quickening inflation was apparent here, too, with September’s monthly increase of 0.36 percent following an August rise of 0.25 percent and a July bump up of 0.13 percent.

The headline year-on-year PPI increase looked a little better – but only if you forget the baseline effect, which can produce misleadingly high or low results if the preceding year’s readings (in this case) were abnormal in either direction.

The September annual rise of 8.55 percent represented the third straight month of deceleration, and the lowest such number since July, 2021’s 7.83 percent.

But it’s coming off an annual increase the previous September of 8.82 percent. By contrast, this year’s highest annual PPI increase (March’s 11.67 percent number) came off a yearly rise of only 4.06 percent the previous March. That’s less than half as high. Therefore, it’s entirely reasonable to see plenty of still worrisome producer price momentum in that most recent annual data.

As for core PPI, September actually saw an acceleration in the annual pace – from August’s 5.60 percent to 5.66 percent. And although the latest figure is still the year’s second lowest, it’s coming off a September, 2020-21 increase of 6.17 percent. The highest annual PPI result for this year (March’s 7.11 percent), that increase followed one between the previous March’s of a mere 3.15 percent – roughly only half as high.

Between these new wholesale price results and the rapid consumer prices increases revealed in last month’s official report on the consumer inflation measure preferred by the Fed, the case for peak inflation looks weaker than it has for months. And here’s one more reason for doubting that the cost of living crisis will abate much any time soon:  the unlikelihood, at least as I see it, that the Fed will keep tightening monetary policy much longer and risk being charged with throwing the economy into a recession with a presidential election coming up.

Of course, the central bank is supposed to be immune from political pressures (including public opinion). But of course, nothing in Washington is. I’ve actually been surprised that the Fed has persisted in its hawkish stance this long. But the real test of its convictions is still months away.       

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Ken Burns’ Ultimate Failure in Vietnam

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Geoffrey C. Ward, Henry Kissinger, Ken Burns, Lynn Novick, Mac Cleland, Man's Search for Meaning, North Vietnam, PBS, Peter Coyote, Public Broadcasting System, The Vietnam War, veterans, Viet Cong, Vietnam, Viktor Frankl

By all means, Watch the Ken Burns/Lynn Novick PBS documentary, The Vietnam War if you haven’t already. At the same time, don’t expect to learn anything important about the conflict as a whole, and especially about its historical or current policy significance, unless you know nothing or almost nothing about it. Moreover, as a result, consider the series an enormous missed opportunity, since disputes over the reasons for U.S. involvement and for the outcome keep shaping many of America’s biggest foreign policy controversies, and since television is how so many in the nation get so much of their information about these subjects.

In fairness, Burns and Novick have expressed discomfort with the notion that they tried, or should have tried, to provide definitive answers to the “Why” of Vietnam and the follow-on issue of lessons to be learned. Here’s how Burns described his view of his work’s distinctive contributions to the Vietnam canon – at least in its non-fiction film and video form:

“What we wanted to do was benefit from the 40-plus years of new scholarship and the willingness of veterans from all sides to speak. To have access to the country and tell not just a top-down story of policy — or failed policy, depending on your point of view — but to do a bottom-up story of the human dimensions of the war. We also felt that the Vietnam War has been so politicized that it’s almost impossible to find out what actually happened during it. The story we’re telling is not devoid of the politics — it’s certainly an important component — but I think it takes its rightful place in relationship to battles that most Americans have never heard of and campaigns and decisions that they were probably not aware were made in their name.”

He added, in the same interview:

“There are many, many lessons of Vietnam. It’s the most important event in American history since the Second World War. It is something that did not turn out very well for the United States, so a lot of people have ignored it and buried their heads in the sand. It’s a source of great anxiety and often anger and bitterness and people find themselves in their own corner, unable to budge. What we tried to do was create an environment with lots of different perspectives honored and coexisting.”

But in another interview, Novick suggested a more ambitious goal:

“This was a very traumatic, difficult and painful moment in American history, and we as a country have never really dealt with it. Our hope was that we could delve into it, try to understand it, put the pieces together in an organized way and perhaps help our country talk about something it really needs to talk about.”

Even if you take a “Just the facts, Ma’am” view of the aim of “trying to understand” the war, or believe that Burns and Novick simply want to help Americans (and any others) make up their own minds, her answer begs too many crucial questions. For example, what substantive guidelines did they use in their effort to “put the pieces together in an organized way”? Even the ostensibly simplest, chronological narrative results from decisions to include or omit, especially on television or in films and videos. How do they explain what was put in and what was left out?

More important, what aspect or aspects of the war do the auteurs think is not understood? What do they themselves now understand that they was unknown to them before? If they keep declining to answer those questions, then it’s difficult to avoid concluding that they haven’t yet formulated any – and that either they have nothing to say on this paramount issue, and/or that they (astonishingly) haven’t seen the need to come to their own explanations, and/or they have, but they’re concealing them for some reason. None of these possibilities is flattering.

I lean toward the first two choices, and for a reason that in my view, anyway, is pretty unflattering itself: Burns and Novick have never actually seen their project as an exercise in either narrative or analytical history. Instead, they conceived it as an exercise in psychotherapy, certainly for everyone directly touched by the war, and perhaps for the nation as a whole.

Further, compelling evidence is provided by the opening and closing minutes of The Vietnam War itself. The first words spoken in Episode One are from former Marine Corps officer Karl Marlantes, who states (with dignity, to be sure), “Coming home from Vietnam was as close to traumatic as the war itself.” He continued “For years, nobody talked about Vietnam….the whole country was like that….It was so divisive. And it’s like living in a family with an alcoholic father: ‘Shhh. We don’t talk about that.’”

Marlantes is followed immediately by then Secretary of State Henry Kissinger, a leading supporter of prosecuting the war, asking immediately following the fall of Saigon to communist forces in 1975, contending, “What we need now in this country is to heal the wounds, and to put Vietnam behind us.”

And soon after comes Max Cleland, a former U.S. Senator and Veterans Administration chief who was cripplingly wounded during the war:

“Viktor Frankl, who survived the death camps in World War II, wrote a book called Man’s Search for Meaning. You know, ‘To live is to suffer. To survive is to find meaning in suffering.’ And for those of us who suffered because of Vietnam, that’s been our quest ever since.”

This focus is made even more explicit at the end of the tenth and final episode. Narrator Peter Coyote somberly recites the denouement that surely presents the most important takeaway according to Burns and Novick (and script writer Geoffrey C. Ward, an eminent historian):

“More than four decades after the war ended, the divisions it created between Americans have not yet wholly healed. Lessons were learned, and then forgotten. Divides were bridged, and then widened. Old secrets were revealed, and new secrets were locked away. The Vietnam War was a tragedy, immeasurable and irredeemable. But meaning can be found in the individual stories of those who lived through it – stories of courage and comradeship and perseverance, of understanding and forgiveness, and ultimately, reconciliation.”

I don’t mean to belittle the value of psychotherapy. Or healing. Or closure. Or any such disciplines or accomplishments. The veterans living, dead, and wounded (physically and psychologically), and their families and friends, deserve no less. The same applies of course for their Vietnamese counterparts. (And in this vein, one of the most stunning revelations in “The Vietnam War” is that at least some reconsideration of the conflict’s necessity and worth has been taking place on the victorious North Vietnamese/Viet Cong side, and that those with second thoughts are willing to express them on camera.) But when creating content for the public arena, should these be the highest priority objectives? Aren’t they more appropriately administered or achieved in private?

Unless Burns and Novick believe that the these personal subjects shed meaningful light on national life and behavior as well? I don’t rule that out, either, but the logically consequent idea – that, like individuals, countries mainly act as they do because collectively they are psychologically healthy or unhealthy, or virtuous and altruistic, or arrogant or selfish or complacent or conceited – seems reductionist, and frankly childish, to me. Just as bad: What’s the solution for these kinds of problems? A new nation-wide Great Awakening?

Again, if you know little or nothing about the Vietnam War, the Burns-Novick documentary is a fine introduction. It’s important also for viewers whose knowledge, whether extensive or meager, is limited to textbooks or even academic studies. For the visuals powerfully underscore Burns’ above description the war as American history’s most important post-World War II event – an assessment with which I strongly agree.

Unfortunately, the film offers no coherent explanation why. Forty years later after Vietnam, barely a decade after the end of another divisive war, in Iraq, as a conflict in Afghanistan approaches its second decade, and as America’s elites continue displaying no ability to think sensibly and pragmatically about the country’s vital foreign interests, it’s a failure that’s no longer excusable.