A roaring economy can bite back

Interesting times. Stories in this week's Nugget about the labor shortage in Sisters and Central Oregon highlight some conditions that may not be familiar.

A top cut of beef can cost close to $10 per pound. For many in the service sector, that is an hour's work. Even hamburger costs more. Those closer to the edge will buy cheaper cuts, won't buy the leaner grind. They will pass up cherries at $4 per pound. Lettuce and spinach, too…it costs more just to eat. So they eat less.

With gas at more than $3 per gallon, a full tank could cost a half day's wages, more than $100 if that tank is on a pick-up truck. $100 for a tank of gas. That too, is going to affect choices made. The next purchase will be a smaller vehicle, used, probably foreign-made.

Construction subcontractors are charging $50, $60 or $70 per hour for some trades. The price of steel went up when the Chinese were buying it all, and the prices of concrete and of timber are affected as well. With interest rates creeping up, it will be harder to buy a house, and harder to sell one.

As the Chinese let their currency float upwards and their products get more expensive, the price of a cotton T-shirt will climb, even at Wal-mart. We won't be able to buy those summer folding chairs at $8. Never could figure out how a nice folding chair could cost less than a nice steak.

Prices going up, requiring wages to go climb, causing prices to go up even further - a classic inflationary cycle. Yet the government says inflation is not an issue. Their statistics are taken from a different community than the one where we live. Or their statistics have not caught up with what we see in the stores, in the paper.

Governments cannot let inflation roar ahead, because that devastates economies. Government controls inflation by raising interest rates and lowering demand. However, if demand is already declining because of higher prices for gas and food and clothes and houses, economic stagnation can exist at the same time as inflation. There is little government can do in a situation of "stagflation."

Except squeeze a little harder, and reduce our actual standard of living. But with many of the factors of stagflation beyond our borders, even squeezing may not be enough. And those that get squeezed the most, as always, will be those at the bottom who will find it harder to live; impossible on one job, not easy on two.

Eric Dolson, Publisher-Editor