Prices keep skyrocketing because of a perfect storm of Americans' stimulus-fueled shopping spree and messed-up supply chains, Goldman says
Pandemic-era stimulus might've been a double-edged sword for low-income Americans. It helped lift them from the depths of the coronavirus
Higher commodity prices typically force producers to raise their prices, which leads retailers and other businesses selling goods directly to consumers to hike their own prices as they look to protect their profits. A jump in lumber prices, for example, can lead to higher costs for new homes, renovation projects, furniture, firewood, and even the barrels used to store liquor.
The first year of the public health crisis saw Congress approve roughly $5 trillion in fiscal stimulus. Much of the relief targeted Americans hit hardest by the crisis and took the form of direct payments and enhanced unemployment benefits. The stimulus was largely effective, but the policy's primary targets are now keeping demand at elevated levels, according to Currie.
Put simply, there are far more low-income people than wealthy people. Low-income groups are also far more likely to spend cash they're given. When low earners are able to spend more on commodities, they usually do, and their larger numbers are"the only way you get that volumetric demand growth," Currie said.in history has been driven by the lower-income groups," he added.
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