Inflation Persists as Wages Rise and Consumers Cut Back

The U.S. economy remains hampered as prices continue to rise and consumers spend less.

Amid the worst consumer price inflation seen in nearly 40 years, the Commerce Department reported Friday that the Federal Reserve's primary measure of consumer prices rose 5.8% last year, the sharpest increase since 1982. The Labor Department also reported this week that employment costs jumped by 4% in 2021 compared to the year prior, the highest annual jump in 20 years. The Fed signaled Wednesday that it will likely raise interest rates soon, potentially as early as March, in an effort to stave off inflation. Recent wage growth for U.S. workers has been countered by rising consumer costs; consumer spending fell 0.6% in December, the first decrease since February. A more positive revelation this week was that U.S. gross domestic product (GDP) grew 5.7% in 2021, the biggest gain since 1984.

Right-rated sources tend to cover inflation more prominently, and often focus more on how COVID-19 stimulus spending may have worsened it. Some reports from left-rated sources focused more on GDP and wage growth, framing them as positive long-term economic signs amid current woes. Inflation coverage across the spectrum typically exudes pessimism about how long high prices will last.