Inflation, greedflation, shrinkflation: Casey, McCormick duel on key election topic

Pennsylvania voters this election cycle are hearing about “greedflation” due to corporate price gouging.

They’re learning about “shrinkflation,” which is what happens when a bag of Doritos contains more air and fewer chips than it once did. They’re even being told about something called “Bobflation” on a website that highlights the soaring cost of grocery staples, Wawa hoagies and tickets to Hersheypark.

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All these terms are meant to tap into the frustration Keystone State residents feel over the wince-inducing prices they’ve been paying for some goods and services. They also point to the battle that incumbent U.S. Sen. Bob Casey and his GOP challenger, Dave McCormick, have been waging over who’s responsible for this sticker shock, and which candidate is best able to deliver relief to consumers.

Recent polls indicate that inflation is at the forefront of many voters’ minds as they weigh their options in the November election, and that’s no surprise to Jesús Fernández-Villaverde, an economics professor at the University of Pennsylvania.

While some economic problems, even big ones, affect small segments of the population, high costs at the supermarket and gas pump have “a salience that other economic maladies do not,” he said.

US Senate candidates try to stand out on inflation

Amid these concerns, Casey has emerged as one of the Democrats’ point people for taking on corporate greed, sponsoring bills to curb high prices driven by so-called greedflation and shrinkflation.

Meanwhile, McCormick has been decrying “Bobflation” and hammering the Democratic incumbent for supporting COVID-era stimulus spending that he says pushed prices through the roof. With his experience as a former CEO, he’s positioning himself as a leader equipped to take on the economic forces that are straining Pennsylvania budgets.

“I think (for McCormick) to be successful, that's going to have to be the thing that resonates with voters,” said Berwood Yost, who directs the Center for Opinion Research at Franklin & Marshall College in Lancaster.

Yost said since Republicans are not the party in power, they do have the upper hand on the economy right now.

Fernández-Villaverde said inflation seems to have peaked and is likely to decrease over the next couple of years no matter how November pans out. The Federal Reserve this week cut interest rates by half a percentage point, a move widely seen as acknowledgment that the worst of the inflation has passed.

However, he said that won’t stop politicians from wrangling over it during this election cycle, or from taking credit once the dust settles.

Why is inflation such a big deal for Pa. voters?

During a recession, when unemployment ticks up, the economic struggles of the moment hit the thin slice of the population that is out of work, Fernández-Villaverde said.

“In comparison, times of relatively high inflation can affect everyone,” he said.

Since January 2021, Pennsylvania has altogether experienced inflation of nearly 19%, or about 1.5 percentage points less than national levels, according to Republicans with the U.S. Joint Economic Committee. That translates into a roughly $980 monthly increase in spending on the same goods and services, the committee analysis found.

Adam Kamins, senior director of economic research for Moody’s Analytics, said the $980 figure doesn’t paint the full picture, since wages have generally kept up with rising consumer costs.

He said Pennsylvania fared a bit better than some other regions, in part because of out-migration, which eased some of the fierce housing demand that can balloon rents and home prices. Demand is slightly less for some other consumer goods in the Keystone State, too, he added.

That said, Pennsylvania’s inflation has dropped a bit more slowly than in other parts of the nation, Kamins said.

And just because inflation has cooled off doesn’t mean consumers will feel a great sense of relief, since most costs will probably never return to pre-inflation levels, economists say. It will take time for consumers to adjust to the new normal — but that could be too late for some candidates on the ballot in November.

“People need like six months, one year, to realize that things have turned a corner,” Fernández-Villaverde said. “People are still sufficiently unhappy about what has happened that they have not fully digested that perhaps the worst is over.”

Who’s to blame for inflation?

McCormick faults the Biden administration for the torrent of federal spending during the pandemic, and Casey for voting in favor of the American Rescue Plan Act.

“When inflation began to rise during this spending spree, the administration promised over and over again that it would be transitory,” the Republican wrote in a January op-ed. “They ignored the warnings, even within their own party, that their spending plans could set off once-in-a-generation price increases.”

For his part, Casey has taken aim at corporate greed for driving up the cost of goods.

“Prices are up because these corporations are scheming to drive them up,” he said during a speech at the Democratic National Convention.

But assigning responsibility for Americans’ financial woes is more complicated than pointing to any one governmental decision or unscrupulous company, according to economists.

“If the stimulus argument is the favorite argument on the right ― that’s kind of the bogeyman ― probably the bogeyman on the left is corporate greed,” said Kamins, who believes this explanation accounts only for a small part of recent price hikes.

The scramble for supplies during the coronavirus pandemic partially fueled cost increases, as did the war in Ukraine, which upended the international energy and food sectors, Fernández-Villaverde and Kamins said.

Fernández-Villaverde wouldn’t give the U.S. government a perfect grade in handling these setbacks, saying the Federal Reserve was somewhat late in increasing interest rates to tamp down inflation.

Kamins said the wash of federal stimulus dollars during the pandemic did contribute to the price increases but contends it was a “very small factor” compared to the supply chain breakdowns and war in Eastern Europe.

The fact that European nations experienced a similar upswing in costs suggests that much of what was happening in the U.S. was beyond the control of policymakers, the economists said.

“Politicians like to blame their opponents for what happened when, in reality, it really has a lot more to do with factors outside of politics,” Kamins said.

What are the Senate candidates’ plans?

McCormick’s plan for economic vitality calls for deregulation, government spending cuts and focusing on international trade relationships.

He also wants to expand oil and gas extraction across the U.S. and put the Keystone State ― already the nation’s second-highest producer of natural gas ― at the forefront of this effort.

His Democratic opponent is focusing on helping consumers by taking on corporate greed.

Casey is pushing a bill that would allow the Federal Trade Commission to go after companies for price gouging. The incumbent also brought forward legislation to prohibit so-called shrinkflation and give officials power to crack down on it.

Some of the proposals proffered by Casey and McCormick could benefit the economy and consumers, Fernández-Villaverde said.

None of them is a cure-all for problems driven by a complex blend of national and international forces, he said. But acknowledging that isn’t exactly a deft campaign move.

“You win elections trying to give voters easy choices. ‘You elect me, and I will do with my magic wand,’” Fernández-Villaverde said. “But there is no such a thing as a magic wand.”

Bethany Rodgers is a USA TODAY Network Pennsylvania capital bureau investigative journalist.

This article originally appeared on Beaver County Times: Election: Inflation becoming important topic for PA Senate race