If the spike in US inflation this year was supposed to be transitory, as the US Federal Reserve Board has consistently claimed, it is turning out to be quite a prolonged transition.was expected to come in about 5 per cent higher than a year earlier, or a fraction lower. Instead it was 5.4 per cent, continuing a trend of surging inflation this year.
That may, of course, change if the numbers remain elevated through the September quarter where those base effects will essentially have been washed out of the comparisons. It could also be that the inflation numbers reflect the massive doses of stimulus the Trump and Biden administrations have poured into the economy over the past year. Whether that stimulus has a temporary or more long-lasting effect might hinge on whether Joe Biden can get some more, very ambitious, spending programs through Congress.
Some of that may be related to continuing supply chain disruptions and strains but it is also possible that demand patterns have changed as a result of the pandemic, and also that businesses are raising prices to make up for lost earnings during the worst of its impact last year. Contributing factors, beyond the distortion and change wrought by the pandemic, could be the permanent changes to global supply chains as countries re-shore activities the pandemic has exposed as essential, like medicines and personal protective equipment. Perhaps the impact of the accelerating de-linking of the American and Chinese economies is beginning to emerge.the financial markets digested them quite comfortablyStocks were down modestly and 10-year bond yields edged up slightly but, at 1.
What that post-pandemic future might look like is critical for governments that have gorged on debt to fund their relief programs and for businesses, households and financial and real property markets.
Neoliberals just cannot admit that their beloved capitalist system has failed and is on the way out. This was all happening BEFORE the pandemic.
Not today but wait a month or so and it’ll faze them big time