Jakarta, CNBC Indonesia -United States (US) has “enemies in the blanket” is getting worse. This refers to the rising inflation in the country.
The United States (US) recorded an annual inflation of 8.5% in March 2022, higher than the annual inflation in the previous month of 7.9%. The consumer price index was also the highest since December 1981.
Quoting the US Bureau of Employment Statistics, Tuesday (12/4/2022) morning local time, the inflation record was also above expectations in the consensus of economists at 8.4%. On a monthly basis, inflation in March 2022 was 1.2%, in line with economists’ expectations.
Meanwhile, the increase in the price of fuel, housing, and food were the main contributors to the increase in inflation. Energy prices rose 32% and food prices rose 8.8%, the highest since May 1981.
This condition was also triggered by the geopolitical turmoil that occurred. Especially if not the Russian attack on Ukraine.
quote CNBC International, the data reflected price increases not seen since stagflation hit the US in the late 1970s and early 1980s. As a result of the surge in inflation, real income, which actually rose 5.6%, has not been able to compensate for the rising cost of living.
Meanwhile, the high inflation has attracted the attention of the US Central Bank (The Fed) which has taken steps to increase its interest rates more aggressively.
Collected market consensus Reuters estimates the Fed will increase the Federal Funds Rate by 2.5 percentage points this year. If realized, it would be the first since 1994.
Previously, this high inflation also made some parties predict a recession in the US. A recession is a condition in which economic growth contracts or is negative for two or more consecutive quarters of a year.
At least this is what Bank of America (BofA) said in FOx News. BofA’s Chief Investment Strategist Michael Hartnett warned that a spike in consumer prices, could trigger an economic downturn in the US, not to mention this in combination with an increasingly hawkish central bank, to fight inflation.
“The ‘inflation shock’ is getting worse, the ‘price shock’ is just getting started, the ‘recession shock’ is coming,” Hartnett wrote.
A recession is likely to come within the next two years, as published in The Hills. Rising inflation and low unemployment, the pandemic, supply chain problems, a war between Russia and Ukraine with energy implications, plus election turmoil in the US and elsewhere – such as France – are clouding the collective forecast.
In the survey Wall Street Journal, the potential for recession rose 28% in 12 months. This compares with 18% in January and 13% a year ago.
“A recession in the next few years is definitely more likely than not,” said Harvard Professor Larry Summers, speaking at Bloomberg TV.
“We’ve never had this moment, when inflation is above 4 (percent) and unemployment is below 4 (percent) and we don’t have a recession in it. The next two years.”
“The Fed must be skillful … lucky to avoid it.”
(boss / boss)
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