After U.S. consumer prices soared in April, gas prices have risen. In Beverly Hills, California on June 2, 2021, a measure of underlying inflation surpassed the Federal Reserve's target of 2%. Reuters
According to Carl Weinberg, a veteran economist, inflation expectations are still being driven "temporary surge of supply issues" and there's no indication of prices rising. The bond yields spiked on Tuesday, causing global stock markets to be agitated. The benchmark 10-year Treasury yield reached a record high of 1.567%. Investors are also worried about rising consumer prices, as well as the U.S. debt limit debate in Washington. Jerome Powell, Federal Reserve Chair, told the Senate Banking Committee Tuesday that inflation could continue for longer than anticipated as supply chain problems and reopening pressures converge. Weinberg, Chief Economist at High Frequency Economics, stated that the global shortage of semiconductors, bottlenecks in ports, and Covid-19 impediments are a temporary spate of supply problems rather than systemic inflationary pressures.
Weinberg stated that inflation is a process, not a single-time change in prices. Weinberg agreed. We are seeing an adjustment to temporary realities on both the supply and demand sides, but not the same stagflation that we witnessed in the 1970s. Stagflation is a condition in which there is high inflation, slow economic growth and high unemployment. It was first described in the 1970s. In such a scenario, economic policymakers face the problem of increasing unemployment by trying to reduce inflation. Weinberg stated that he didn't yet see any basis for such an outcome, and added: "This isn't 1973." Weinberg acknowledged that some investors believe that inflation will continue to rise, which is driving up bond yields. However, he said that there are other factors that keep the U.S. economy from being balanced, including Covid.
