The mixed messaging coming out of the federal government is enough to send even the brightest American into a tailspin.
What is really going on?
There’s no denying that the costs of common goods and services are on the rise. Every American is experiencing this either at the gas pump and the checkout counter at the grocery store. This fact comes as a surprise to most since during Trump’s time in office, Americans were more well-off than ever.
Biden has attempted to shift the messaging surrounding his economic failures by essentially denying that inflation exists, or claiming that it’s temporary. Never has he, or anyone in his employ, reassured or clarified what is actually happening to the economy because, if he did, there’s no telling the backlash for the Democrats in 2022 or 2024.
Federal Reserve Chairman Jerome Powell said that inflation could be more aggressive and last longer than central bank expectations.
Powell, fresh out of a two-day meeting with top Fed officials, told reporters that while inflation could be more intense than previously thought, indications are that it will settle back down in the future and the Fed is still not ready to begin talks about raising interest rates to mitigate price increases.
“As the reopening continues, bottlenecks, hiring difficulties, and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expect,” Powell said.
Consumer prices increased 5.4% for the year ending June, the highest rate of inflation since 2008, the Department of Labor said earlier this month. The figure was well above predictions of 4.9%.
The Fed is targeting 2% sustained inflation and full employment and has said that it is not concerned about inflation overshooting that goal as long as it sinks back down. Powell noted on Wednesday that current inflation is “well above” 2% and also emphasized that there is “absolutely no sense of panic.”
The chairman said that the central bank sees current price growth as driven by the supply side, which is having trouble handling the massive spike in demand as the United States emerges from the COVID-19 pandemic.
Author: Sebastian Hayworth