How Concerned Should Consumers Be About Four-Decades High in Inflation?
Summary from the AllSides News Team
With inflation surging to a new four-decade high, should consumers expect the U.S. to fall into a recession or will the economy take a more optimistic turn?
Outlets across the spectrum on Wednesday highlighted that the consumer price index increased 9.1% from a year ago in June. Despite the Federal Reserve's attempts to slow economic growth by raising its benchmark interest rates, inflation has continued to climb for eight consecutive months. The restricted supply of consumer goods, embargos on Russian oil and rebounding from the COVID-19 pandemic were cited as top factors for historic inflation increases. Higher inflation rates have caused many Americans, including high earners, to be cautious about their spending habits. 65% of Americans who earn six figures said they were "very concerned" about rising consumer prices, according to a Morning Consult/CNBC poll.
Some left-rated voices suggested that the Fed should be less concerned about an "already-fading" inflation rates and more focused on preventing a recession, which "directly reduces economy-wide incomes." Conversely, many right-and center-rated voices accentuated that "a reality check is in order," ultimately warning Americans to "beware wishful thinking" about avoiding a recession.
Featured Coverage of this Story
From the Right
Beware Wishful Thinking About Inflation and Recession
Inflation has peaked. The Fed’s tightening has accomplished its mission. Strong labor market and consumer fundamentals will keep any recession mild.
These are among the story lines providing a tailwind to stocks in recent weeks. They feed hopes the Federal Reserve has achieved a soft landing: bringing inflation down to 2% without pushing up unemployment or tipping the economy into recession.
A reality check is in order. A soft landing is certainly possible, but these story lines look more like wishful thinking than a tough-minded appraisal of the Fed’s task. Let’s review.
From the Center
US inflation surge signals tough times ahead
June’s awful US inflation numbers are a reminder of tough days ahead for many in America and around the world, and especially the most vulnerable segments of the population and the most fragile developing countries.
This is not because inflation will record yet another four-decade high over the next three months. It won’t. Rather, it is because of the damage already unleashed and that which is to come.
At 9.1 per cent for June, the headline number for US CPI inflation came in well above the median forecast of 8.8...
From the Left
3 reasons not to panic about decades-high inflation
When the latest data on consumer prices in the United States landed Wednesday, the headline number was ugly.
Inflation surged to 9.1% in June, according to data from the Bureau of Labor Statistics. That was higher than economists polled by Refinitiv were forecasting.
It was also much higher than the 8.6% rate logged in May, which rattled financial markets and pushed the Federal Reserve to hike interest rates more aggressively — renewing fears about whether the central bank could tame inflation without triggering a recession.
Investors were bracing for a surprise. But there’s reason to...
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