Inflation is there, but it is temporary. This is the credo of the US Federal Reserve (Fed, central bank), which continues to revise upwards its forecasts in this area for 2021, while continuing to believe that it will fall back slightly above its target of 2% in 2022. Thus, the institution chaired by Jerome Powell estimates that the price increase will be 4.2% in 2021 – a much higher increase than what it predicted in its estimates for the month of June (3 , 4%). However, she expects a sharp drop to 2.2% next year.
The Fed was taken aback by the strength of the price pressures. It was raw materials like wood and the shortage of semiconductors that, for example, forced auto production lines to a halt, causing used car prices to soar. To this were added the jump in global freight costs, due to the congestion of Chinese ports (but also in the western United States), and, now, soaring energy prices, while natural gas prices are increasing all over the world.
The planet is facing a supply shock, as was the case with the oil crises of 1973 and 1979. But the central bank considers that these phenomena are being absorbed, while the real estate market has calmed down a bit. in August. More importantly, the Fed expects that this will not lead to an inflation-wage spiral.
A glaring labor shortage
The reality is not so clear: between August 2020 and August 2021, nominal hourly wages (excluding inflation) grew by 4.8%. This high figure masks a decrease in purchasing power of 0.9 point due to a rise in consumer prices, estimated at 5.9% by statisticians from the Ministry of Labor. The economy of the United States is therefore in a situation which is all the more delicate as the Americans refuse to return to work (10.9 million job offers for 8.4 million unemployed in July).
There is a glaring labor shortage in the health and home help sectors, as well as in the hotel and catering industry and commerce, which is adapting by digitizing services. The issue is whether Americans are now rejecting poorly paid jobs or whether the phenomenon is temporary. The Fed hopes this is the second assumption. The employment figure was particularly below expectations in August, with only 235,000 jobs created compared to 1.1 million in July. The underperformance was attributed to the spread of the Delta variant, which shattered the summer season.
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