In the economy, Americans are getting mixed messages. The economy is booming, unemployment is at an all-time low, and earnings are rising. However, inflation — a broad trend of increasing consumer price — is at a 4-decade peak, and so this fact appears to be overshadowing any good economic news for many voters. Panelists on ABC’s “This Week” on Feb. 13 discussed Americans’ fears about inflation during a roundtable debate.
The coronavirus pandemic, according to Patrick Gaspard, who served in President Barack Obama’s administration and now is president & CEO of the Center for American Progress, a leftist think tank, is to blame for inflation.
Cross-national data demonstrates that the United States’ economic growth has exceeded that of other big, comparable economies, and analysts agree that this quick expansion has contributed to the country’s current high inflation rate.
However, strong economic development is not the main cause of high inflation in the United States. Gaspard’s office cited an OECD report from February 7 as proof of his allegation. The US was the only participant of the Group of Seven industrialized economies whose inflation-adjusted gross national product rose above its pre-pandemic level, according to the report.
The G-7’s other six members — Canada, Germany, Italy, France, Japan, & the UK — have not yet achieved the GDP levels seen in the 4th quarter of 2019. When we examined the most recent annual rate of inflation for the G-7 countries, we discovered that the United States had the highest rate.
Quick Growth & High Inflation
However, there isn’t a perfect association between quick growth and high inflation. Germany & Canada have had second- & third-highest rates of inflation, respectively, but when the epidemic was taken into account, their economic expansion barely budged into positive territory. The United Kingdom and France, meanwhile, have nearly equaled the United States’ GDP growth rates while experiencing lower inflation.
Experts agreed that Gaspard’s focus on high GDP growth as a contributor to inflation is appropriate, but that the reasons for rising prices are more complicated.
Experts agree that the United States has had quicker growth in the economy than most of its closest global competitors, which has added to inflationary pressures. Although most of the inflationary pressures can be traced back to global issues associated with the epidemic, others have resulted from the Biden administration’s fiscal decisions, reports Wral.com