Inflation in California—Lessons From 1979 and 2021

A customer shops for meat at a Safeway store in San Francisco, Calif., on Oct. 4, 2021. Justin Sullivan/Getty Images

Commentary

If you were too young to remember the 1970s inflation in California, you have no idea how bad things still could get—if inflation in 2021 keeps rising. Some recent news items:

• On Tuesday, the U.S. Department of Labor reported producer prices soared 8.6 percent over the past year;
• On Wednesday, it reported inflation in October jumped at a 6.2 percent annual rate;
• Also on Wednesday, China reported its producer price index went up 13.5 percent over the previous year. That inflation soon will be hitting all the imported items Americans buy from Walmart and Amazon. The U.S. trade deficit with China in September hit $40 billion a month, a new high, as imports to the U.S. continued to rise.

For some perspective on how bad things could get if the high inflation continues, look to the year 1979. Although I’m from Michigan, I spent May 1978 to April 1979 in Monterey learning Russian at the Defense Language Institute. The Army provided “three squares and a cot,” but I saw what my local civilian friends were suffering. And my rusting 1970 Buick LeSabre slurped gas at a low 11 mpg.