President Donald Trump wants to bring inflation back to the U.S. economy.
In a tweet on Friday morning, Trump suggested that the United States Postal Service doesn’t charge enough to deliver packages, advantaging Amazon and others instead of the government-backed service.
“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” Trump tweeted. “Should be charging MUCH MORE!”
In fiscal 2016, the USPS lost $5.6 billion. Trump’s tweet comes just a day after the President boasted about “record” retail sales during the holiday season.
And while Trump’s tweet, and his specific mention of Amazon (AMZN), is part of his long-running feud with Amazon CEO Jeff Bezos — who also owns The Washington Post, which released the Billy Bush tape among other unflattering reports on his businesses — the economic implications of his suggestion for the Postal Service are fairly straightforward: things would get more expensive.
For years, economists and central bankers have been awaiting the return of inflation to the U.S. economy, where a 4.1% unemployment rate would have been expected to push wages higher with prices across the economy rising as a result. Instead, wage growth has been meager, prices are rising at about 1.7% year-on-year, and outgoing Federal Reserve chair Janet Yellen went so far as to call the lack of inflation a “mystery.”
Were the Postal Service to take Trump’s directive and increase prices on retailers dramatically, however, one would surely expect that this higher pricing would be passed on to consumers.
One of Amazon’s signature programs is its Prime membership, which costs $99 a year and gives customers access to two-day free shipping among other benefits. Were prices in the shipping industry to rise, the price of prime memberships could also increase. Individual goods would also become more expensive, as higher shipping costs for end consumers would likely be felt across the supply chain. Amazon, of course, would not be the only retailer likely to raise prices amid a drastic increase in shipping costs in the e-commerce industry.
