Is the inflation that we are currently witnessing going to be a short-term or a long-term phenomenon? That’s the question that many are asking. Experts have just provided their answer, and you’re not going to like it.
In a recent survey conducted by the Wall Street Journal, economists indicated that they expect inflation to stay high for several more years.
The economists surveyed specifically indicated that they expect inflation to be about 3.2 percent higher in the final months of 2021 than it was in the final months of 2020. And, they expect inflation to remain at 2.3 percent annually for 2022 and 2023.
The surveyed economists, overall, expect a 2.58 percent yearly increase in prices over the next three years, which, if true, would be the highest inflation that we have seen since the 1990s.
What is driving this inflation?
This is the big question, as the cause of the inflation could suggest whether or not it is here to stay. Democrats, who have been arguing that the inflation that we are seeing is only going to be a short-term phenomenon, have been offering a variety of explanations.
But, the main explanation from Democrats has been that this is the inflation that was expected to come following the coronavirus pandemic, which saw businesses close and people confined to their homes. Here’s how Vox recently put it:
The pandemic, of course, meant a disruption in supply chains and habits. All of a sudden, millions of Americans were stuck at home, hoarding toilet paper and clearing grocery store shelves.
Politico, similarly, reported: “Officials at the Fed and in President Joe Biden’s administration, say they expect the supply-chain bottlenecks that have stoked inflation” to continue, as “investors have grown more worried about long-term growth with the emergence of contagious variants of the coronavirus.” But, the outlet reports that these officials expect this inflation “to ease later this year as the economy fully reopens.”
The problem with explanations like these, according to experts, is that it leaves out important causal factors, including the Biden administration.
Desmond Lachman, an economist and senior fellow with the American Enterprise Institute, for example, recently explained to Breitbart what is really driving inflation: it is a combination of government borrowing and spending, of growing government debt, and of an expansion of the money supply.
“Milton Friedman’s argument — which is widely accepted — is that inflation is everywhere a monetary phenomenon,” Leachman said. “So if you’ve got this rapid rate of money growth, you should be expecting that this inflation isn’t transitory. This could be here for a while.”
Americans are concerned
Whatever the cause may be, we can say two things for sure: prices are up and Americans are worried.
A new poll from TheEconomist/YouGov has found that 26 percent of adults believe that inflation is a bigger problem than unemployment, and, in addition, 42 percent said that both are equally important. On top of that, 42 percent of adults indicated that they believe that the prices of goods and services is the most important economic indicator.