It was only a couple weeks ago that several Republican senators threw cold water on the urge to pass more stimulus spending by saying it might trigger inflation, but that was obviously not the path we're on and, in fact, it isn't.
Republican senators will have to come up with more plausible reasons to oppose more stimulus as consumer prices just posted their largest decline on record.
Consumer prices in April took their biggest drop in history going back to at least 1957 as the economy reeled from restrictions imposed to control the coronavirus.
The Bureau of Labor Statistics reported Tuesday that the CPI excluding food and energy prices slumped 0.4%, the steepest monthly drop since records have been kept.
While the decline in prices was broad-based, the biggest swoons in the “core” part of the index came in apparel and transportation services, which dropped 4.7% apiece. Commodities not including food and energy fell 0.7% and medical care services prices were off 0.5%.
Used cars saw a 0.4% decline amid a slide in auto sales.
Big drops within the categories were car and truck rentals (-16.6%), airline fares (-15.2%) and men’s suits (-11.3%).
I'm not an economist but I expect this is just the beginning of deflation as unemployment will almost certainly surge to 20 percent or higher this month. Fewer people working means fewer paychecks and lower consumer demand. And consumer demand won't be what it was anytime soon.
Congressional Republicans have warned that inflation is the reason we shouldn't pass more stimulus; why we shouldn't send Americans more stimulus checks, but that may be the only thing that can stop record deflation.
If Trump and GOP want everyone to go shopping again so badly, they should be at the front of the line demanding more stimulus checks. But they aren't because -- I don't know -- I guess they believe most Americans have just as much savings and disposable or passive income as they do, but we don't.
Just sell your second or third home, right?
If Senate Majority Leader Mitch McConnell and the Trump White House block an aid package for cities and states, this report will look relatively tame as municipalities go bankrupt. Government spending is the only thing keeping the economy on life support and Republicans are not just opposing more spending. Their opposition means steep budget cuts and bankruptcies. It means free-falling municipal bonds and shuttered fire departments.