Inflation in the sunbelt…



While inflation has been rising quickly across the country, it is especially intense in Sun Belt cities like Phoenix, Atlanta, Miami and Tampa, which have experienced price increases well above 10 percent this year, much higher than the national rate of 8.5 percent in July. Prices in the Southern United States have risen 9.4 percent over the past year, the fastest pace of any large region in the nation and more rapid than in the Northeast, where prices are up 7.3 percent.

These cities have several factors that are causing their inflation to be higher.

-taxes are low. In econ this means the collective wallet raising prices faster.

-wages were lower. This means with immigrants and women often absent the workforce now wages are rising faster. Laws of smaller numbers.

-energy costs. The costs are the same regardless of the taxes per gallon. As input costs, NG, Oil, Coal etc, again the law of small numbers matters.

-industrial output. While we were bemoaning a shrinking manufacturing base for decades with supply side econ, we are still a massively industrial power. Factories are being built in the US and labor now is less of an issue. There is no need to concentrating on the sunbelt. Poorer workers where education is not wanted, some of those places, are not great destinations for a retooling America.

-the paradox of income. If a state has a higher income level on average the inflation has already been in place to a degree. The law of larger numbers plays a role.

-the federal minimum wage. People are hurting in the sun belt cities because people are paid less. Congrats! Great game plan. You have saved money. The maths are wrong but you saved money.

I have told friends for years moving to the sun belt will catch up with you when you can not afford it in retirement. The prices and taxes will constantly be going up. You are not planning for that.