Although the Ukraine conflict is hotly debated, Americans living in the United States continue to be concerned about rising inflation. Analysts and economists agree that U.S. inflation will remain high. Goldman Sachs reported on Sunday that inflation will likely be more severe than first thought. Moreover, in terms of inflation coupled with the Ukraine invasion, an economics professor at American International College (AIC) stressed there’s “a perfect storm brewing.”
Goldman Sachs: ‘Strong Jobs Market and Rising Inflation Could Ignite a Moderate Wage-Price Spiral’
The inflation situation in 2022 has been terrible and may continue to worsen, according to an updated report by Goldman Sachs economists. “The inflation picture has worsened this winter as we expected, and how much it will improve later this year is now in question,” the note from the financial institution explained. Goldman’s note to investors, follows the Consumer Price Index (CPI) report that showed inflation in the U.S. climbed at its fastest rate in 40 years since February 1982.
This month saw the US inflation hit its highest level in 40 years. The Fed still buys bonds. The Fed’s balance sheet reached an additional record at $8.93 trillion this week, more than double the amount in 2 years. Fed’s New Policy: Inflationary Fire is fueled.
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Goldman’s report on Sunday further disclosed that the financial institution thinks that inflation could rise higher if there’s a disruption to supply chains and energy producers over Ukraine’s conflict with Russia.
“The initial inflation surge might have lasted long enough and reached a high enough peak to raise inflation expectations in a way that feeds back to wage and price setting,” Goldman Sachs analysts said. The Goldman Sachs report further stressed that a strong jobs market coupled with rising inflation could “threaten to ignite a moderate wage-price spiral.”
AIC Economics Professor Says ‘We Got a Perfect Storm Brewing,’ Atlanta Fed President Raphael Bostic Favors a 25 BPS Move in March
Analysts and economists have been looking at the U.S. Federal Reserve, trying to predict what it will do in March. AIC’s professor of economics John Rogers said things will depend on what the Fed decides to do in terms of inflation. “We got a perfect storm brewing,” Rogers told the news desk at wwlp.com. “Inflation is pretty strong at least through the end of the year. A lot of that is what the Federal Reserve is able to do and what happens with this crisis.” The professor continued:
It’s just the geopolitical instability. You’ve seen the stock market highly volatile in the last couple of weeks. Anybody with a pension plan will be concerned about this. The other big area is energy, it’s a worldwide market and the price of oil goes up around the world, it’s going to affect us as well.
Meanwhile, the Federal Reserve hinted that the benchmark interest rate may increase “soon,” and Fed chair Jerome Powell hinted it would likely be in March. Gold bug and economist Peter Schiff said last week that it’s possible Ukraine’s conflict could make the Fed keep the benchmark interest rate down. “Perhaps, the Fed is relieved that Russia invaded Ukraine as now it has an excuse not to raise interest rates in March,” Schiff tweeted.
Raphael Bostic, president of Federal Reserve Bank of Atlanta said Monday that he supports a 25-basis point hike. “I am still in favor of a 25 basis-point move at the March meeting,” Bostic told the group of Harvard University students that attended the virtual discussion.
How do you feel about the U.S.’s inflation? Let us know what you think about the statements from Goldman Sachs, AIC’s professor of economics, and Raphael Bostic in the comments section below.
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