Inflation is hammering the voters who will soon decide some key midterm races
Matthew Rice doesn’t have to look hard for signs of inflation in Savannah, Ga.
A gallon of gas cost $2.79 a few months ago, he said. Now it runs him more than $4.
“And, of course, when the price of gas goes up, the price of products goes up,” the 45-year-old added. “So yeah. It’s played a role in our household.”
Rice, a longtime Atlanta Braves fan and graduate of Armst–rong State University, is one of the tens of thousands of Americans who say rising prices are straining their household budgets and shaping how they think about this year’s elections.
Gradual-but-steady jumps in the costs of groceries, housing and gas have forced consumers like Rice, who manages reservations for an RV park on nearby Tybee Island, to change how they spend money.
While his work has been busy as more Americans take long-delayed vacations following pandemic-era shutdowns, Rice said inflation has made him choosier when he, his mother and 10-year-old daughter shop for groceries every other Friday.
“We have, at times, made substitutions based off what’s available because of the supply chain,” he said. “And at times, due to the price, we maybe try other brands of products that we normally would not have tried before.”
Few areas of the country have seen inflation as bad as the South, where prices have risen across the 16-state region by an average of 8.4% from a year ago. That compares with year-over-year inflation of 8% in the Midwest, 8.1% in the West and 6.6% in the Northeast, according to the Bureau of Labor Statistics.
Inflation is particularly bad in Tampa, Miami and Atlanta where consumer prices have jumped by an average of 9.6%, 9.8% and a whopping 10.6%, respectively, over the last year.
But prices aren’t the only thing heating up in the South, as Georgia again finds itself in the middle of a fierce election cycle. Inflation has vaulted to the top of the minds of both voters and candidates across the state.
At the federal level, several Republicans hope to unseat Democratic Sen. Raphael Warnock, who defeated Republican Kelly Loeffler in a special election in 2020. Loeffler was appointed in 2019 by Republican Gov. Brian Kemp to finish the term of former Sen. Johnny Isakson, who resigned for health reasons.
Warnock is Georgia’s first Black senator, and his win gave Democrats a razor-thin majority in the Senate.
Meanwhile, the state’s gubernatorial race pits Kemp against fellow Republican and former Sen. David Perdue, who’s been endorsed by former President Donald Trump.
In an already-bitter primary competition, Perdue hopes to tap into Georgia Republicans’ frustrations with Kemp after the governor refused to overturn the 2020 election results that favored then-candidate Joe Biden. Trump falsely claimed widespread fraud led to Biden’s win, and asked the state’s top elections official to “find” enough votes for him to overturn his loss.
The GOP winner is all but certain to face another tough challenger in the November general election from Democratic candidate Stacey Abrams, who narrowly lost the 2018 governor’s race to Kemp.
But as different as Georgia’s candidates and elections are, voters are unified by their shared fatigue over rising sticker prices for gasoline, groceries and housing.
For the past several months, Labor Department data has shown that year-over-year price jumps have been hitting levels not seen since the Ronald Reagan administration. In its most recent update last month, the department said its benchmark consumer inflation index rose 7.9% over the last 12 months, the hottest reading since January 1982.
The Labor Department’s March 2022 consumer price report is due out on Tuesday at 8:30 a.m. ET.
Those familiar with the White House’s thinking say the administration expects to see hot headline March CPI figure given that the prior print failed to fully capture a dramatic uptick in petroleum prices caused by Russia’s invasion of Ukraine that began in late February.
Core inflation, which excludes volatile energy prices, could be more modest by comparison in the March report.
The Federal Reserve, the U.S. central bank tasked with keeping prices stable, considers inflation around 2% a healthy byproduct of economic growth. But too much can signal overheating and a disconnect between the economy’s broadest forces of supply and demand.
For consumers, unruly inflation can erode what economists call purchasing power, or the total quantity of goods and services they can buy at their current income.
But as fast as prices rise in Savannah, Rice said some grocery purchases aren’t up for debate.
“We try not to make too many adjustments because my daughter — she likes certain brands,” he laughed, saying they can’t substitute cheaper brands for Kraft Macaroni & Cheese or Quaker Oats’ Peach & Cream flavored instant oatmeal among his daughter’s favorites. “Kids usually have a certain taste.”
Economists say the country’s inflation woes began in the spring of 2021 as Covid vaccines arrived and then exacerbated by a variety of seemingly unrelated factors.
The inoculations stoked demand for all the things consumers gave up to stay safe during the worst of the pandemic — travel and dining out. Demand also surged for new cars, paid for in part with all the money saved by staying in for months.
Factory shutdowns during the pandemic left automakers like Ford and General Motors behind on production. The surge in demand, combined with a shortage in computer chips, further reduced vehicle inventory and sent prices soaring on cars and electronics.
Labor shortages — due in part to people calling out sick with Covid or quarantining because of an exposure — led to freight backlogs at the ports of Los Angeles and Long Beach, Calif., and higher shipping costs that were passed on to consumers.
Russia’s invasion of Ukraine has sent oil prices spiking, and soaring real estate values have driven up the cost of housing.
Caroline Fohlin, an economics professor at Emory University in Atlanta, said Arizona and Georgia are both seeing steep home price jumps as people leave the country’s largest cities for cheaper locales. The pandemic opened up the prospects of working from home — from anywhere — for city dwellers who could buy expansive homes with yards for the cost of a one-bedroom in New York or San Francisco.
Apartment List shows that Atlanta rents climbed by about 18% over 2021, with the average per-month cost for a one-bedroom apartment at $1,831.
“They’re moving in droves to places like Savannah, Charleston – you know, the coastal South,” Fohlin said. “Take a look at the real estate market in, say, Sullivan’s Island, South Carolina” where “shacks” are selling for millions,
“That’s great news for the old timers who are able to sell their previously $50,000 shacks for $3 million,” she said.
Roger Ferguson, former vice chair of the Federal Reserve, attributed most of the rise in consumer prices in Georgia and Arizona to the rise in housing costs.
“There might be some differences in terms of your labor force, compensation composition,” Ferguson, a CNBC contributor, said last month. “But my hypothesis is that it’s primarily around housing.”
In New York City, where renters comprise about 67% of all households, the average rent for a one-bedroom apartment fell from about $1,920 per month in February 2020 to $1,510 by January 2021 as residents fled congested cities, according to online listing site Apartment List.
Rents have more than rebounded since then as bosses increasingly insist on workers returning to their offices. The monthly cost of a one-bedroom in New York City is now around $2,068.
Politics of prices
The mismatch between supply and demand, and the resulting inflation, has blossomed into a critical issue for Biden and Democrats hoping to retain control of Congress this year.
Nearly one in five Americans, 17%, said in March that inflation is the most important problem facing the U.S., according to polling site Gallup. That figure represents a 7 percentage-point climb from the 10% of Americans who in February said inflation was the country’s chief headache.
As inflation has climbed, Biden’s polling has fallen: Just 36% of those surveyed by Gallup say they approve of his handling of the economy in a recent poll, down from 54% in February 2021.
Republicans hoping to win back control of Congress have seized on rising prices as evidence of economic mismanagement and frivolous spending by Democrats, who control the White House and both houses of Congress. They have focused on the $1.9 trillion American Rescue Plan, the Democratic coronavirus relief law passed in March 2021, as vaccines were starting to boost demand in the U.S.
One such Republican is former pro football player Herschel Walker, who’s running against Warnock in Georgia’s Senate race.
Walker, a longtime Trump ally, echoed the frustrations of many Georgia Republicans earlier this year when he shared to Twitter an image of a near-barren grocery store shelf and blamed Democrats’ economic agenda for the frothy inflation.
“Our shelves are empty, the supply chain is a mess, and inflation is at the HIGHEST in 40 years,” Walker wrote in a Jan. 19 Twitter post. “President Biden’s approval ratings continue to drop. Why is he focused on social spending? People just want affordable gas and groceries on the shelves!”
Democrats attribute the price spikes to a combination of overwhelmed supply chains, the war in Ukraine, labor shortages and unprecedented demand. Warnock specifically has met opponents’ inflation barbs by blaming corporate profiteering.
“While corporations are seeing record profits, Georgia consumers are seeing record prices,” Warnock said in a Twitter post from February. “Whether it’s working to ease supply chain issues, or capping out-of-pocket costs for prescription drugs, I’m fighting for hardworking Georgians every day.”
Heating up in Arizona
Across the country in Arizona, prices have also affected consumer spending — and the political landscape.
Aaron Spector, a 28-year-old Tempe resident, said his landlord’s move to hike rent by nearly 20% led him to make some changes — he bought his own home.
“Honestly, it just didn’t make sense to rent anymore with the increase that I was seeing,” Spector, who works in sales for a logistics firm, told CNBC. “I did want to buy a house – it was on the timeline. But it was definitely expedited – almost necessary – when I saw what the rent was increasing to.”
In nearby Phoenix, Kevin McElwain said signs of housing cost hikes are everywhere.
McElwain, who works sourcing labor and materials for homebuilders, said more expensive raw materials are fueling prices for new homes.
“Anything from framing, concrete, electrical – you name it. Prices have risen probably by at least 50%,” he said. A lot of the problem, he explained, comes from shortages of supply for workers and raw commodities.
“You have people that will turn down bids for new projects because either they don’t have the necessary parts and materials, or they don’t have the crews,” McElwain, 29, said.
Those shortages are likely a main culprit in Phoenix’s high prices, which have risen 10.9% over the last 12 months. Over the last year in the city, meat prices have jumped 16.2%, clothing costs have climbed 15.5% and restaurant bills are up 5.9%.
Spector said that inflation, and the state of the economy more broadly, will influence him in the ballot box come Election Day.
“It will definitely impact how I vote,” the graduate of the State University of New York at Geneseo said. “It will obviously have an impact. When people’s bank accounts are affected like this, it changes people’s minds.”
Phoenix resident McElwain, who said he’s not registered to vote with either party, said inflation is on his mind this election year.
“I’d like to see it be addressed by the candidates that are running,” he continued. “But I’m still going to take everything that they have to say with a grain of salt one way or the other.”
Votes from McElwain and Spector this fall will help determine whether Democratic Sen. Mark Kelly will hold on to the seat he won in Arizona’s 2020 special election against then-GOP incumbent Martha McSally to finish out the remainder of former Sen. John McCain’s term.
Like Warnock, Kelly has tried to convince voters that he and his fellow Democrats are working to check unruly prices.
The retired astronaut in March detailed “6 Things” he is doing to try to cool inflation in Arizona. Those efforts include a bill to suspend the federal gas tax for the rest of 2022, his contributions to the CHIPS semiconductor bill and a deal to cap out-of-pocket prescription costs for seniors.
“We’re in the middle of a global microchip shortage that’s driving up prices on everything from cars to appliances,” Kelly said in a Twitter post on April 2. “Our bill to boost U.S. microchip manufacturing will help end that shortage, create thousands of high-paying jobs for Arizonans, and grow our state’s economy.”
The strain soaring inflation has put on Americans — and the anxiety it has caused incumbents running this fall — has shown up repeatedly in the policy choices made by swing-state lawmakers this year. On Thursday, Senate Majority Leader Chuck Schumer, D-N.Y., named both Kelly and Warnock to a conference committee that will hash out a final microchip bill with House members.
Both senators have also tried to show voters they can address an issue that has vexed Rice in Georgia and people across the U.S.: high gas prices. Kelly and Warnock co-sponsored legislation that would suspend the U.S. gas tax for the rest of the year. The bill has not moved forward since senators unveiled it in February.
“This bill will lower gas prices by suspending the federal gas tax through the end of the year to help Arizona families struggling with high costs for everything from gas to groceries,” Kelly said in a statement at the time.
Warnock added in his own statement: “Hardworking Georgians being squeezed at the pump understand that every penny counts.”