Inland Empire Inflation Rate Continues to Rise
KVCR's Jonathan Linden spoke with California State University, San Bernardino Economics Professor Daniel MacDonald to get an update on the Inland Empire economy.
Jonathan Linden: You're listening to 91.9 KVCR News, and I'm Jonathan Linden. I'm joined now by Cal State San Bernardino Professor Daniel McDonald, who's the chair of their economics department. Daniel, can you tell listeners what your economic indicator is for this month? (Professor Macdonald authors the weekly Inland Empire Economic Update newsletter.)
Daniel MacDonald: So, my indicator for this month is inflation. So, the November statistics came out, and once again, the Inland Empire is at the top of the list. We have a 7.9% year-over-year inflation rate between November 2020 and November 2021.
Jonathan Linden: And what were some of the highest inflation numbers within that statistic for this month (November 2020)?
Daniel MacDonald: Sure. So, when I look at inflation, I do like to not just look at the headline number but look at what's going on underneath the hood. And it does seem that the inflation that we're experiencing, the 7.9% Rate, is very highly concentrated in just a few expenditure categories. So, for example, transportation costs, which make up about 10% of the Inland Empire resident's budget, increased by 25% year over year. So that's between November 2020 and November 2021. This includes everything from cars, trucks, used cars, and new cars and trucks, as well as gasoline prices. So that's one big area where we saw a lot of inflation, 25%. Another area where we continue to see high rates of inflation is in housing. So specifically, we're looking at rental prices. The price for apartments has really been increasing quite a bit over the last year. And so, a 6.5% Inflation rate within that subcategory. You know, again, making up about 40% of the Inland Empire resident's budget, the typical Inland Empire resident's budget. (That) means that (the) inflation number of 7.9% is really high because in these particular areas, Inland Empire residents are spending a lot of their money.
Jonathan Linden: And how do we fit into the bigger picture of things? Because the inflation rate is not just an issue in the Inland Empire, but something the entire U.S. has been experiencing. Should people still be concerned about this? Are we still kind of in a preliminary phase, or what are your views on that?
Daniel MacDonald: Well, when you do surveys of the American public. Inflation always ranks way up there, like right up there with national defense or national security and other really big concerns, public safety concerns. Inflation is a big deal to Americans, and it's understandable why. Economists tend to be a little less concerned with it, or at least a little bit more moderate in how worried they get about it. And that's because we know that if inflation were to really pick up, policymakers would do something about it. They would act very quickly because they know how important it is to the American consumer. And so, while I am a little concerned at the high rate, 7.9%, for example, is the highest that we see across all metro areas in the U.S. It's not necessarily something that I think is going to turn into the kinds of hyperinflation that we saw in the United States in the mid-1970s to early 1980s. You know, back then, we had inflation rates of over 10%. But the way that I view things and the way that a lot of economists view things is that this is all part of just the growing pains of moving out of the pandemic and slowly trying to recover from it. For example, you probably know that a lot of people were out of work a year ago, a year and a half ago, and that means that those people weren't making new automobiles. They weren't necessarily moving into new apartments. And so, the prices for those things were barely budging a year or a year a half ago. And now that production is starting to pick up, and now that demand is starting to pick up, we are seeing these rapid increases in prices. And so, to me, this is just part of kind of the growing pains as we know, slowly (recovering) from the pandemic, and it's not necessarily something to be overly concerned about. And again, if something were to raise the alarm, policymakers would certainly be on top of it and (be) looking for ways to try to slow things down.
Jonathan Linden: All right. Well, as usual, thank you so much, Daniel, for taking some time to speak with me. I look forward to speaking with you next month.
Daniel MacDonald: Thanks, Jonathan. It was a pleasure.