Over the past year consumer prices have increased 6.2%, marking the highest jump since 1990 (https://apnews.com/article/business-consumer-prices-inflation-economy-prices-10e00ba16f8fb94f45ced724f2ea2e45). To add to this dilemma, prices increased 0.9% alone between September and October, continuing a steady trend from earlier this summer. Energy costs also increased by 4.8% over the past month, adding to the growing costs for average consumers.
One major reason for this is the continued supply chain issues stemming from the pandemic. Stores are having issues keeping items in stock while gas prices are over $3 for most of the country. Pair this with the fact that most Americans are spending on goods instead of travel, entertainment, and other services, and the supply/demand balance suffers. Federal Reserve Bank of San Francisco president Mary Daly said, "For families, they're feeling it right now. If you got to a grocery store, you buy food that you usually buy, you then fill your gas tank on the way home so you can go to work or take your kids to school, you're feeling this."
This trend may continue for some time too. Several leading economists have said that it will get worse before improving and may even continue into Summer 2022. All this being said, job recovery is moving forward, with many companies opting to pay higher wages to attract new employees. The Federal Reserve places much of the blame for the economic woes on the pandemic, hoping that once it ends the U.S. economy will fully recover.
If that is the case, the Biden Administration and his supporters in Congress have extra incentive to find a way to end the pandemic. As it stands, President Biden is facing his lowest approval numbers. This has already impacted the most recent local and state elections and could have significant influence on the midterm elections. If he can’t turn things around, Biden could find himself in a stalemate as Republicans take back legislative control.
How has inflation impacted your daily life and budget? How long will this last before many Americans reach their breaking point? Could the increased spending from the government that we saw last year return to try and alleviate struggling citizens, or will this only serve to exacerbate the issue?
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