EXPERTS AGREE: INFLATION IS TRANSITORY AND NOT A WORRY
Without Cars and Pandemic-Affected Services, Core Inflation Increased Less in June than in April and May
Chief Economist for Cox Automotive, Jonathan Smoke: “This is the poster child illustration for transitory.”
Today’s uptick in consumer prices is likely transitory and the temporary result of the economy bouncing back after the pandemic, according to economic experts. Without cars and pandemic-affected services, core inflation rose 0.22 percent month-over-month, relative to 0.28 percent in May and 0.31 percent in April.
Experts in economics and business agree that slight upticks in consumer prices are transitory and not a long-term concern:
Head of U.S. Economics at Bank of America, Michelle Meyer: “Inflation surprised substantially to the upside in June but, once again, owing to outsized increases in prices in a few categories. This reinforces the idea of transitory inflation.” [Bloomberg, 7/13/21]
Managing Partner for Harris Financial Group, Jamie Cox: “Once you realize that a third of the increase is used car prices, the transitory picture becomes more clear … inflation is rising, but things are well behaved and have not changed materially.” [Reuters, 7/13/21]
Chief Economist for High Frequency Economics, Rubella Farooqi: “We see gains in consumer prices slowing from the current pace over coming months as the impact of a few components that are currently driving price increases recedes.” [Politico, 7/13/21]
Farooqi: “The trend [in inflation] is likely to revert to pre-pandemic patterns, when services sector prices drove changes in the headline and core indexes.”[Politico, 7/13/21]
Chief Economist for Northern Trust, Carl Tannenbaum: “[June’s increase in inflation was] once again driven by an outsized increase in the price of a small category.” [TheWeek, 7/13/21]
Chief Economist for Cox Automotive, Jonathan Smoke: “This is the poster child illustration for transitory.” [NPR, 7/13/21]
Thanks to the public investment in the American Rescue Plan, there are signs of strength across the economy:
In Q1, GDP rose in all 50 states and DC, as real GDP for the nation increased at an annual rate of 6.4%
Personal income rose at a rate of 59.7% in the first three months of 2021
The economy has gained 3 million jobs since January 2021.
Last month, the World Bank doubled its January projections of US GDP growth from 3.5% to 6.8% thanks to the public investments in the American Rescue Plan