A dealership sign is seen outside of Honda certified used car dealership in Schaumburg, Ill., Thursday, Dec. 16, 2021. Prices for used cars have soared so high, so fast, that buyers are being increasingly priced out of the market. Credit: Nam Y. Huh / AP

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Arthur Phillips is an economic policy analyst at the Maine Center for Economic Policy.

The past year and a half has been among the most difficult times we’ve faced as a state and as a nation. We’ve lost family and friends, millions have been thrown out of work, and the virus continues to disrupt our lives just as we think we’re back to normal. On top of all that, prices are rising and many workers and families don’t know how they’ll keep up.

The pandemic has caused a shift away from spending on services, such as restaurants and hotels, to goods such as dishwashers and cars. This has driven up demand just as the pandemic massively disrupted production and supply chains.  

The cost of energy has also risen over the past year, with gas prices up more than 50 percent. When the pandemic hit, the price of oil plunged. But as the global economy came back to life, so did demand for fuel. Meanwhile, oil producing countries kept supply in check, driving prices upward.  

Another big reason for inflation is the rising price of cars and trucks. Due to pandemic-related factory closures and a shortage of semiconductors, car manufacturing plummeted in 2021, with the world’s biggest car companies producing millions of fewer cars. The limited supply sent  the price of new cars up nearly 12 percent over the past year while the price of used cars and trucks rose more than 37 percent.  

Fortunately, the rising costs of energy, cars and a host of other goods show signs of easing in the year ahead. The price of gas peaked in November at nearly $3.40 per gallon, went down in December, and is projected to be just above $3 over the course of 2022 and around $2.80 in 2023. Car prices should settle down as factories come fully back online, though the global shortage of semiconductors persists. Meanwhile, the price of other goods may stabilize as fewer container ships are waiting in ports and shipping capacity improves.  

But another culprit remains at large: The massive corporations taking advantage of these problems, using the cover of inflation to raise prices and boost their bottom line — and even admitting as much to shareholders. Nearly two-thirds of the biggest U.S. publicly traded companies reported higher profit margins through mid-November than they did over the same stretch of 2019. Nearly 100 of these large corporations have reported profit margins that are at least 50 percent above 2019 levels.

Inflation will likely decline over 2022. But it’s not enough for things to return to the way they were, with widespread inequities and working families struggling to get ahead. Through the strategic allocation of American Rescue Plan Act funds, Maine’s record surplus and the possible passage of Build Back Better, we have the opportunity to grow Maine’s economy and fund a better future.

The Build Back Better agenda could expand access to health care, child care and elder care and lower costs for families, while helping more workers — women in particular — get back in the labor force. Build Back Better could also make major investments in renewable energy, lowering our dependence on volatile oil prices. Funds from the American Rescue Plan and our state’s budget surplus should also be invested in food and heating assistance, affordable housing, health care and paid family leave.

Over the past year, the federal government took historic action to avoid economic catastrophe in the face of a once-in-a-century pandemic. These interventions, including stimulus checks, supplemental unemployment insurance, and the expanded Child Tax Credit, were so successful that despite everything we’ve been through, fewer people are in poverty and workers with low wages are seeing long overdue raises.

Now, we have to build on that success for the years ahead. By using available funds and calling on the wealthiest to pay what they owe, we can ease the hardship of rising prices and lay the foundation for a more resilient economy that works for all of us.