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During the worst of the pandemic, prices started rising everywhere. Groceries, cars (both new and used), gasoline, housing. At one point, inflation reached 9.1%, the highest level since 1981, although it’s since cooled down.
When things get more expensive, some want to blame the current presidential administration. Former president Donald Trump said both President Joe Biden and Vice President Kamala Harris were responsible for the record levels of inflation that consumers saw in recent years.
But presidential policies did not drive the record inflation we saw during the pandemic, economists told Marketplace.
“I think that people generally over attribute control over the macroeconomy to presidents,” said Tyler Schipper, an associate professor of economics at the University of St. Thomas.
That over-attribution applies to jobs and consumer prices.
Supply chain issues had more of an effect on inflation than policies from either the Trump or Biden administration, Schipper said. There was pent-up demand as the economy reopened, while supply chains were “bogged down.”
In 2020, when the COVID-19 pandemic hit, it became extremely difficult to produce items since factories shut down or workers had to practice social distancing at factories, said Tarek Hassan, an economics professor at Boston University.
Imagine one day everybody had to work with one arm tied behind their back, Hassan said. You’re going to be working at a much slower rate.
A global chip shortage meant there were fewer new cars for sale, which pushed up prices.
Car owners who might’ve sold their old cars to buy a new one kept their vehicles, which ended up constraining the supply of used cars. And rental car companies, who also help supply the used car market, hung onto their vehicles when travel demand recovered. On top of rising demand, these rental companies faced shortages since they sold many of their cars during the pandemic. The mismatch between supply an …
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