By Mega Gosa
A Tennessee State University economist says inflation is not going away anytime soon and is poised to be the top economic challenge this year.
Since December 2021, the inflation rate rose to 7 percent, the highest in 40 years. A stronger consumer demand, continuing supply chain issues, and the emergence of the coronavirus omicron variant, continue to plague the economy, making it increasingly tough for working-class citizens to make ends meet.
Recently, U.S. President Joe Biden held a meeting with White House officials to discuss the administration’s plan for combating rising prices as inflation continues to surge throughout the U.S. He talked about steps the administration has taken to increase consumer choice and scrutinize what he called “mega mergers” that reduce competition.
“The inflationary situation is extremely worrisome,” says Dr. Achintya Ray, an economics professor in the College of Business at Tennessee State University. “Furthermore, the inflationary pressures are likely to be here for a considerable period of time unless an intervening market crash or recession brings about deflationary pressures.”
In July, the president signed an executive order aimed at increasing competition by cracking down on larger firms in industries that the administration sees as too “consolidated.”
Dr. Ray says there is no reason to panic but the American people should be very cautious about what lies ahead.
“Rising inflation, rising public debt, declining employment to population ratio, declining consumer sentiment, unsustainably low tax base, steep increase in inflation causing money supply, rapid decline in blue chip stocks, worrisome unsustainable increase in house prices, all point to enhanced probabilities of a recession,” says Ray.
Here are some figures Dr. Ray cited on the state of the economy:
- The producer price index has increased nearly 21 percent between January 2020 and December 2021.
- Public debt in America is now about 23 percent bigger than the country’s gross domestic product (GDP), which is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
- The American tax base may be reaching a breaking point, with more than 100 million U.S. households, or 61 percent of all taxpayers, paying no federal income taxes last year.
- Median house prices have increased by nearly 26 percent between March 2020 and November 2021. Such a steep increase may be unsustainable over the long run. Discussions about a 2008-09 style housing market crash are increasing.
