US, rising inflation and Biden risks midterm elections
Joe Biden, a few months ago, he predicted that rapidly growing inflation in the United States would be a passing phenomenon. Never has prediction proved wrong in such a short time. American inflation has indeed caught up in November 6.8%, the highest level since 1982, nearly 40 years ago. La Federal Reserve, in his latest report on the inflation trend, he definitively eliminated the word “transient”, describing it as instead persistent, at least in the short term. All this is also confirmed by the consumer price index (CPI). Second hand, rental, utility bill, furniture or food prices continued to rise in November, peaking at 6.8% year-on-year.
Inflation accentuated by the energy crisis and congestion of supplies
A trend higher than that of October (6.2%) and also one tenth of a percentage point higher than the forecasts of Reuters and Bloomberg (6.7%). All accentuated mainly by two factors: congestion in supply chains and the energy crisis, aspects that have caused the prices of goods and services to skyrocket, especially at a time of high spending for the Christmas holidays. And in this moment of uncertainty and the spread of the Omicron variant, how is the US economy preparing for recovery in the next year? Unlike its Chinese rival, which has decided to continue to “pump” money into its economy, la Federal Reserve (Fed), instead, given the high inflation and the improvement of the labor market, it has chosen to speed up the withdrawal of incentives. The “tapering”, the stop to financial stimuli will thus take place in March instead of June as expected at the start. From the current 0, interest rates are expected to progressively increase through six adjustments expected over the next two years.
USA, forecasts for the economy in 2022, the first year of recovery
Macro forecasts in the first year of the recovery from the pandemic were downward magazines due to the Omicron variant. GDP was expected to rise 5.9% in September and an inflation rate of 4.2% by the end of this year. GDP of 5.5%, and inflation of 5.3% . For 2022, the forecast is 4% with inflation of 2.6%. But some positive signs are also arriving on this front. Although the year-on-year data confirms very high inflation, analysts at Business Insider are convinced that the upward trend may have peaked and we may begin to see a slowdown in the rise in prices and costs, even if not as fast as one would like. Data from the Bureau of Labor Statistics for November confirms a clear impact of the supply chain crisis on bills paid by businesses and consumers across the country. Blockages in ports and shortages of goods continued to put a strain on the recovery. The start of Christmas shopping, including Black Friday, has doubled the intensity of demand, against a still limited supply.
USA, the energy crisis has favored inflation
Another determining factor in explaining the price increase it is the energy crisis. There was a rise in gas prices in the United States in November. The national average reached $ 3.43 per gallon (3.7 liters) with a downward trend that could affect the cooling of the economy. An economy that, still in part, depends on the evolution of the Omicron variant. To try to calm prices, especially in the automotive and domestic use, Joe Biden announced that he has put on the market 50 million barrels of oil from American energy reserves.
US, inflation may jeopardize Joe Biden’s plans
Ma la spread of contagion and inflation ancora sustained put at risk the large public spending projects announced by the President during the electoral campaign and, now, on stand-by in Congress. The most immediate consequence for the dem is the risk of losing the 2022 midterm elections. Elections that fall at a time when Joe Biden is suffering from a dramatic decline in popularity. The galloping inflation offers Republicans an argument for linking the massive planned spending by the Biden administration to rising prices. The White House defends itself against these accusations, confirming that this is the moment to invest in social spending. “The pricing challenge underscores the importance of Congress taking immediate action to approve my Build Back Better plan, which reduces the amount families pay for health care, medication or childcare.”, Biden relaunched. A battle that continues, but for now, on the skin of American consumers.