(PresidentialWire.com)- While the Biden Administration continues to assure Americans that the rise in inflation is only transitory, US economists’ inflation expectations just keep rising.
Last month, Treasury Secretary Janet Yellen assured Congress that inflation should level off by the end of 2021. However, according to Bloomberg’s latest monthly survey of economists, forecasters have a much dimmer view – anticipating inflation measures will continue to rise every quarter through the first half of 2022.
Forecasters raised their estimates for both the consumer price index and the personal consumption expenditures price index (the latter is the inflation gauge preferred by the Federal Reserve).
As things stand, forecasters believe the consumer price index will likely remain above three percent through March 2022 – likely peaking at a 4.3% year-over-year gain in the current quarter.
Data released last week showed the gauge rose more than expected for the third month in a row.
Likewise, the personal consumption expenditures price index is expected to rise 3.5% between April and June, up from the estimated 3% forecast in Bloomberg’s May survey, and far above the Fed’s hoped for 2%.
The rise in estimates is due in large part to rising fuel prices. But even metrics that exclude food and energy costs have been adjusted higher.
In response to a surge in demand coupled by bottlenecks in supply and rising costs, many businesses have been forced to raise their prices as well. It is unclear if those increased prices will result in more persistent inflation.
Surprisingly, consumer spending remains strong. Economists project that the gross domestic product is expected to grow by 10% in the second quarter.
On Tuesday June 15, as inflation concerns increased, the Federal Reserve kicked off its two day meeting. In addition to analyzing the disappointing job reports as well as inflation, the Fed is expected to discuss whether it should raise interest rates from near-zero, where it has hovered since March 2020.
Initially the Fed did not expect to raise interests rates until 2024. However, in light of the current inflation numbers, some predict that interests rates are more likely to increase as early as next year.