According to recent NerdWallet estimates, Americans would need to spend an extra $11,500 this year to maintain the same level of living. Many economists like Milton Freidman considers inflation a hidden tax. The median household income in the US for 2020 is $67, 521. This is a 17% inflation tax!!!!!!
The projections, released in August, were based on data from the U.S. Bureau of Labor Statistics on inflation and yearly expenditure (BLS). NerdWallet analysts examined how expenditures would compare this year to 2020 when the COVID-19 outbreak began.
According to analysts, 2020 will be the “final full year of reasonably steady inflation.” The United States inflation rate was 1.23 percent in the same year. The BLS figures, inflation in the United States was 8.3 percent in August. Researchers stated, “American families spent $61,300 on average in 2020.”
“This figure comprises everything we spend money on, including accommodation, food, entertainment, clothes, transportation, and everything else. By 2022, it is expected to reach $72,900, a difference of more than $11,500 if consumers wish to retain their current level of life,” they stated.
Inflation is one of the most important economic concepts. It is the rate at which the prices of goods and services rise over time. The main cause of inflation is government spending. Secondary causes are too much money chasing too few goods and costs going up.
Inflation can be good or bad for the economy. When inflation is low, it can help businesses by making it cheaper to borrow money. This can lead to more investment and growth.
But when inflation is too high, it can hurt businesses and consumers. Prices go up, and people’s wages don’t keep pace. This can lead to economic problems and even recession.
Currently, the Fed is trying to slow inflation. However, the success is very low, with Truflation reporting an 8.91% inflation!
Hard Landing Ahead
The Federal Reserve strives to keep inflation in the sweet spot, not too high and not too low. But as a history of causing recessions when it tries to raise rates.
In yesterday’s Federal Open Market Committee (FOMC) address, Federal Reserve Chairman Jerome Powell verified a handful of my major expectations. He made a case for additional suffering and a long winter by promising to keep raising interest rates into next year.
The Fed now expects unemployment to rise through 2024 and the US economy to expand at less than 2% per year through 2025. This is undoubtedly a best-case scenario, as Powell recognized Wednesday that “a smooth landing is really difficult” and that those modest possibilities drop if the Fed needs to be more restrictive.
Coming Unemployment & Depression 2023
Yesterday, the Federal Reserve made history by authorizing a third consecutive 75-basis-point raise in an aggressive bid to combat the US economy’s white-hot inflation.
The massive increase, which was unthinkable to markets just months ago, brings the central bank’s benchmark lending rate to a new target range of 3% -3.25 %. This is the highest fed funds rate since the 2008 global financial crisis.
The Fed’s decision on Wednesday is the Fed’s biggest policy measure to combat inflation since the 1980s. It would also certainly inflict economic hardship for millions of American companies and people by increasing the cost of borrowing items such as houses, vehicles, and credit cards.
Powell said as much yesterday: “We’ve probably in the housing market got to go through a correction to get back” to “reasonable” prices. Powell went on to say that home prices and rent would remain elevated. “Shelter inflation is going to remain high for some time. Hope for the best, plan for the worst,” he said. These are not exactly words of encouragement, especially when they come from the man whose job it is to ensure stable prices and maximum employment.
To recap, we don’t have stable prices, and Powell is about to wreck the stock market, unemployment, and real estate to slow inflation. This will most likely lead to a depression in 2023.