While the conflict in Ukraine is a hot topic, fears of rising inflation are troubling Americans living in the country, as economists and analysts say US inflation will likely remain high. Goldman Sachs said in a report published on Sunday that inflation is likely to be worse than initially expected this year. Furthermore, in terms of inflation accompanying the invasion of Ukraine, an economics professor at the American International College (AIC) insisted that “a perfect storm is brewing.”
Goldman Sachs: ‘Strong jobs market and rising inflation could ignite a moderate wage-price spiral’
Inflation has been terrible in 2022 and it couldn’t get better this year, according to a new inflation report from economists at Goldman Sachs on Sunday. “The picture of inflation has turned worse this winter, and how much will it improve later this year,” the financial institution’s note explained. Goldman’s note to investors follows the Consumer Price Index (CPI) report, which showed inflation in the US climbed at the fastest rate in 40 years since February 1982.
US inflation hit a 40-year high this month and the Fed is still buying bonds. Their balance sheet hit another record high of $8.93 trillion this week, more than doubling in the past 2 years. New Fed Policy: Throw Fuel on the Inflation Fire.
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Goldman’s report on Sunday further revealed that the financial institution thinks inflation could be higher if there are disruptions in the supply chain and energy producers over Ukraine’s conflict with Russia.
Analysts at Goldman Sachs said, “Early inflation growth could last long enough and peak high enough to raise inflation expectations that fall back on wages and pricing.” The Goldman Sachs report further emphasizes that a strong job market with rising inflation “could threaten to ignite a moderate wage-price spiral.”
‘We’ve Got a Perfect Storm Brewing,’ Says AIC Economics Professor Rafael Bostic, Atlanta Fed President Supports 25 Bps Move in March
Economists and analysts are watching the US Federal Reserve and trying to predict what the central bank will do in March. AIC economics professor John Rogers said things would depend on what the Fed decides to do in terms of inflation. “We got a perfect storm,” Rogers told the news desk on wwlp.com. “Inflation is pretty strong at least through the end of the year. There’s a lot of this that the Federal Reserve is able to do and what happens with this crisis.” The professor continued:
It’s just geopolitical instability. You have seen a lot of volatility in the stock market in the last few weeks. Anyone with a 401k plan is probably nervous. The other big sector is energy, it’s a worldwide market and as the price of oil goes up around the world, it’s going to affect us too.
Meanwhile, the Federal Reserve indicated that the benchmark interest rate could rise “soon”, and Fed Chairman Jerome Powell indicated that this is likely to happen in March. Gold bug and economist Peter Schiff said last week that it is possible that Ukraine’s conflict could keep the Fed below the benchmark interest rate. “Perhaps, the Fed is relieved that Russia invaded Ukraine because it now has an excuse not to raise interest rates in March,” Schiff said. tweeted,
Speaking at a Harvard virtual event on Monday, Federal Reserve Bank of Atlanta President Rafael Bostic told attendees he favors a hike of about 25 basis points. “I’m still in favor of a 25 basis-point move at the March meeting,” Bostic told a group of Harvard University students who joined the virtual discussion.
What do you think about rising inflation in America? Tell us in the comments section below what you think about the statements by Goldman Sachs and Raphael Boustik, economics professors at AIC.
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