Despite Joe Biden’s delusional statements, inflation is not slowing down. Americans are living more expensive lives due to rising gas prices, rents, and rising grocery bills. The inflation rate for this year is 9.1 percent, which is the highest level since 1981.
Gas prices are starting to moderate slightly, which is a bright spot. The average pump price is now $4.65 after peaking at $5 per gallon last month.
However, there is no guarantee that prices will not rise again.
New York Times:
Unwelcome news was included in the report beyond the headline numbers. The core inflation index, which strips out fuel and food prices and gives an indication of underlying inflation trends, remains high and came in faster than economists expected. It rose 5.9 percent from June 2006 to June 2013, a slight decrease from the 6 percent reported in the previous report. In fact, the core measure actually rose 0.7 percent between May and June. This is more than the monthly increase in the previous report and is bad news to central bankers.
Currently, workers are not asking for higher wages because of high gas prices and grocery store prices. There have been many strikes already, and a major one — a strike by railroad workers — is becoming more likely each day.
Inflation will be a part of the economy once workers start asking for raises. This will affect all three — workers, producers, and consumers — when they consider buying and selling. This psychological threat is far more powerful than anything Joe Biden or the Democrats can do.
The threat has prompted the central bank to intensify its efforts to combat inflation. To make it more expensive to borrow money and slow down consumer demand, the Fed raised interest rates by 25% from zero to near zero in March. It raised rates by half a point in May and 0.75 percentage points last month.
Many central bankers stated that they would like to increase rates by 0.75 percent in July and hope to raise rates to 3.5 percent by year’s end. They could do that by raising rates by half a point in September, and one-quarter point in November and December.
Companies start to tighten their belts when loans become more costly. This means reducing labor costs as it is one thing a company can control.
Bank of America economists revised their recession forecast. They now anticipate a “mild recession” in 2022. This is due to high inflation and declining consumer spending. We will see how mild the Biden recession is.