Inflation is starting to look like that unexpected — and unwanted — houseguest who just won’t leave.
For months, many economists had sounded a reassuring message that a surge in consumer prices, something that had been missing in action in the U.S. for a generation, wouldn’t stay long. It would prove “transitory,” in the soothing words of Federal Reserve Chair Jerome H. Powell and White House officials, as the economy shifted from virus-related chaos to something closer to normalcy.
Economists at Wells Fargo have joked grimly that the Labor Department’s CPI — the consumer price index — should stand for “consumer pain index.” Unfortunately for consumers, especially lower-wage households, it’s all coinciding with their higher spending needs right before the holiday season. Suddenly, businesses had to scramble to meet demand. They couldn’t hire fast enough to plug job openings — a near-record 11 million in October — or buy enough supplies to fill customer orders. As business roared back, ports and freight yards couldn’t handle the traffic. Global supply chains became snarled.
“Inflation is a lot higher in the United States than it is in Europe,” he noted. “Europe is going through the same supply shocks as the United States is, the same supply chain issues. But they didn’t do nearly as much stimulus.” “I think it will be transitory,” she said of inflation. “But economists have to be very honest about defining transitory, and I think this could last another year easily.”
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