Marc Cuniberti I went out to dinner last week at a popular Italian restaurant here in my neighborhood.
Being a Friday night at prime time, I made reservations earlier that day and arrived a bit late only to find I needed not to worry about my tardiness. In fact, I shouldn’t have even bothered making a reservation. Usually packed to the gills on such a night, the restaurant was half empty. Not only had the number of customers changed, and not for the better for the owner, but the menu had also changed and also not for the better.
Prices had jumped. I had been at this restaurant about 6 months prior and the prices had changed back then too. And hint, they didn’t go down.
I thought back to President Biden’s claim at the Asia-Pacific Economic Cooperation summit, Nov. 16, 2023 that prices were coming down.
Guess he doesn’t eat at my restaurant. At that same meeting he warned “Let me be clear to any corporation that hasn’t brought their prices back down even as inflation has come down: It’s time to stop the price gouging”.
I guess my local restaurateur is going to get in trouble. Damn price gouger.
Now you Biden supporters don’t go getting yourself in a huff. It’s not all Joe’s fault we have the worse inflation in 40 years. Truth be told, every president since Lyndon Johnson has overused the nation’s credit card to bail out this, that or the other.
It just so happens that the inflation chickens came home to roost while Joe was at the helm. But it could have happened on Trump’s watch, or Obama’s white house residency, or a handful of other lucky presidents who left the white house after spending a fortune and not paying for it.
Literally.
Indeed, spending, printing and borrowing greenbacks has been the modus operandi for Uncle Sam for decades. About 6 decades to be semi-exact.
As I looked around at the empty seats while I gulped my first red and pretended to listen to the wife go on about some topic or another, I thought no wonder there were empty seats. Food prices are through the roof.
My host wasn’t practicing price gouging. He was practicing survival.
It’s hard enough to run a restaurant. I know, I saw my father-in-law run one for years and I saw how hard he worked. My wife, when she was young, worked right alongside her dad and told me of the hardship that running an eatery was.
Keeping food fresh, maintaining consistency, dealing with flakey employees, irritable customers and slaving over a hot stove all night at breakneck speed to get the meals out or prep side dishes all day.
Add in an inflationary conflagration to deal with and you’ve got the makings of a price gouger.
Not.
Contrary to what Washington might think, prices are not coming down. The rate of increase is coming down, but not the prices themselves. Simply put, prices were rising close to double digits last year. Now they are rising by single digits but they are still rising.
If we look at the math, it’s ugly.
The problem is rates of inflation add more and more dollars the higher a price goes.
Suppose a $100 suit in 2022 rose by 10% that year. It’s up 10 bucks to $110 bucks. In the year 2023 suppose it rose by 5%, which adds another 5 bucks, making the suit now $115.00.
The increase in 2023 of 5% was on a higher amount. So true, the 2022 inflation rate (10%) decreased to 5% in 2023, but it still added $5 more to the cost of the suit.
Prices are not coming down. They are going up, and because of the math, they can rise by a greater amount of actual dollars.
For prices to FALL, we would have to see deflation, and that we haven’t seen on a broad scale for many a decade.
The bureaucrats might have us believe it’s those greedy price gouging corporations we have to go after. Or maybe my price gouging restaurateur, taking advantage of the high inflation to gouge me even more. Bet he just loves higher prices so he can screw me.
Then I finish the wine and my common sense returns. I was going to stiff my price gouging the host with no tip to teach him gouging will not be tolerated.
Then I realized price gouging probably ain’t what it used to be, and flipped him a fifty.
And yes, I really did, and he appreciated it. I thought, maybe it will stop him from gouging.
“Watching the markets so you don’t have to”
This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. His insurance agency is BAP INC. insurance services. Email: [email protected]
