Are prices too high? And why?

"One final thought. Even though prices are higher than they once were, at least we can still obtain most items we need. After Covid and some of the supply chain issues (like, toilet paper?), it is nice to be able to buy necessities. Sometimes we need to plug our noses at the checkout counter, but we can go home with what we needed. And as the saying goes, that is not nothing!" 

Globalization. As bad as it was for our national security and the kinks in our supply chains, that sweat shop labor from overseas kept many prices down. But now that our national direction is different. Onshoring much of what was offshored with more products will be made by Americans for Americans. Guess what? American labor does not use sweat shops. Plus - now that DHS is sending illegals back home, the "off the books" cheap labor which they provided will also be gone. To be replaced by Americans doing services for Americans. Translation = the gravy train is now over, and stuff is going to cost more.

Fact of life. The cost of living in America is high. It has been masked in the past by globalism. Then during the Biden era, when inflation went hog wild due to excessive government spending, Americans saw the value of what was in their wallets start to shrink. That 20% increase in costs will probably never go away. Now add in some tariff costs, and even though inflation is down in the 3% range, it seems as if the price of some goods has never been higher. Like what? Maybe beef and coffee for starters. 

Gone are the days of the 1950's and 1960's where mom stayed home and ran the household and dad worked. One car, modest house, just enough to live on with maybe an occasional vacation. It was Ozzie and Harriet and Father Knows Best all rolled into one big happy family. But now we have two people working (in many families), destination weddings, two or three cars, large houses (some are even McMansions), and wants and needs which never seem to be fully satiated. Just the other day in the paper, it said to buy a house these days, just about any house, an income of six figures is needed to qualify for it. WOW!

The next five years are going to be like riding on a roller coaster. Prices will probably stay high with more and more things being brought back onshore. Even though the president has convinced many companies to do business in the United States, the price of labor will be high (livable wage high). But then comes the random variables - AI and robotics. When more labor becomes automated, what will that do to prices? And the folks thrown out of work, what will they do for money? Nobody, not one soul (economist or otherwise), knows the answer on how things will work out by 2030 (just four short years away).

President Trump promised to reduce inflation - and he has. It is back in the 3% range, and he would like to get it back in the 2% area. But prices remain high. The 20% run up we got under Biden will be with us for a long time - maybe forever. What about the tariff increase? Will that go down once all these trade deals are done? Maybe. Automation - will that help? Maybe. Bottom line is we just don't know. My advice should I be asked is simply this - expect prices to remain on the high side but demand that inflation stay low.

One final thought. Even though prices are higher than they once were, at least we can still obtain most items we need. After Covid and some of the supply chain issues (like, toilet paper?), it is nice to be able to buy necessities. Sometimes we need to plug our noses at the checkout counter, but we can go home with what we need. And as the saying goes, that is not nothing!