According to expert Jim Bianco, the US economy will not return to pre-COVID-19 inflation levels.
The founder of Bianco Research made the statement in an interview with Real Vision’s Andreas Steno Larsen on July 29.
“We’ve entered a new economy, we’ve entered a post-COVID economy, it’s not like the pre-COVID economy,” Bianco said, adding that more people working from home and various other things “have fundamentally changed this economy.”
“We don’t want to acknowledge that, we want to discuss whether or not the economy has changed,” he added.
Bianco said people are still waiting for the economy to return to pre-pandemic 2019, but said he believes that just won’t happen.
“Whatever it was before 2019, don’t even send that to the economics department, send that to the anthropology department, they could study that history. We’re now looking at what 2024, 2025 and 2026 is going to be like, and it’s different than 2019,” he said, adding that he believes the economy will have more “friction,” “on-shoring,” going forward . and more labor shortages.
All of this, Bianco said, will result in “substantially higher inflation,” which will not be 9 percent but “maybe 4 or 5 percent,” before noting that the Federal Reserve has to deal with the fact that “they they are nowhere near neutral.”
Inflation only “temporary”
Biden administration officials, including Treasury Secretary Janet Yellen, have downplayed the risk of a recession in the United States, repeatedly claiming that rising prices are only “temporary.”
But Bureau of Labor Statistics data released in July showed inflation hit 9.1 percent in June, a figure not seen since the early 1980s.
Higher prices reportedly cost American households an additional $718 in June, with families in Arkansas, Louisiana, Oklahoma and Texas as well as Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming spending more than other states. according to the Joint Economic Committee.
Increased costs are mainly caused by higher prices for transport, energy, food and housing.
“Temporary is a word you can’t say in business, but everyone still believes it,” Bianco said on Friday, citing forecasts showing inflation will fall to 2 percent and stay there, which is the goal of the US government central bank corresponds to .
“Everyone still believes this is temporary inflation and not something more permanent and that will be the question for the rest of the year,” he added.
Bianco’s comments come after the central bank hiked interest rates by 75 basis points in July for the second time in a month.
The next meeting of the Federal Reserve’s Federal Open Market Committee is scheduled for September 20-21.
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Katabella Roberts is a reporter currently residing in Turkey. She reports news and business for The Epoch Times, focusing primarily on the United States.
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