Grocery Prices And Other Goods Rising At Alarming Rate Thanks To Biden

Written By BlabberBuzz | Friday, 11 June 2021 14:30

Biden's liberal spending, estimated to be around 4 Trillion in the first six months of the year hae led consumer prices increasing by a record 5%, according to a report released on Thursday by the Department of Labor.

The increased numbers from the consumer price index mark the largest 12-month increase since a 5.4% increase for the period ending August 2008. The numbers were also higher than what forecasters had estimated, which will likely bolster fear of inflation getting out of hand.

"Consumer prices are continuing to move up on base effects, supply chain disruptions, as well as the reopening. Stronger demand, especially for services, as well as supply bottlenecks will provide a lift in the near term," noted Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "But the pace should stabilize and moderate as reopening effects fade and once supply catches up."

Economists are warning of extensive inflation and have cautioned that the economy is now at risk of overheating given the Federal Reserve’s monetary policies and the large amount of federal spending that has been infused into the economy, which is simultaneously experiencing a glut in demand as the pandemic abates.

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The Fed has stated that it does not intend to veer from its course of ultra-low interest rates until there is 2% sustained growth and maximum employment. The central bank noted it anticipates breaching that 2% figure but said that the increase would be transitory and the numbers will settle down next year.

Despite the high level of yearly consumer price growth, Selin Ilik, a senior account executive at Grayling, said this month's uptick was "inevitable," given that the consumer price index hit its lowest point in May of last year during the pandemic.

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"This, combined with strong recent price growth in some specific areas, meant that the year-on-year inflation figure was inevitably going to be big," Ilik concluded.

Bill Dudley, the former president of the Federal Reserve Bank of New York, cautioned this week that the central bank’s approach to managing inflation risks recession. He warned that if overheating becomes too much, the Fed might have to pump the brakes and raise interest rates, which could cause increased volatility in short-term rates and an increased likelihood of an “economic hard landing.”

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Treasury Secretary Janet Yellen warned this weekend that the country could see inflation up to 3% through the rest of the year. Yellen also pointed out that it would be a plus for society’s point of view and the Fed’s point of view if the country ends up with a slightly higher interest rate environment, although she later walked back those remarks and said that she doesn’t “see any evidence that inflation expectations are getting out of control.”

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Even as the economy heats up and prices increase, there are concerns regarding labor shortages in the U.S. Some leading economists have suggested that the federal government’s expanded unemployment program is keeping people from the workforce because of its generous payouts.

The May jobs report fell somewhat short of expectations, reigniting concerns about a labor shortage. The economy added 559,000 new jobs, as opposed to predictions of 650,000.

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