Economics/Class Relations

An inflation surge poses a growing threat

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Economists are starting to question whether the Federal Reserve missed its chance to act on inflation, said Christopher Rugaber in The Associated Press. Consumer prices rose 7 percent in the past year, the steepest climb since 1982. The latest U.S. jobs report also “raised alarms,” showing “another sharp drop in the unemployment rate” even as businesses are still reporting a labor shortage. That has forced “an unexpectedly large increase in hourly pay” to attract and retain workers. With no sign of the price crunch easing, inflation has “become the most serious threat to the economy, a growing worry for the financial markets, and a major political problem for the Biden administration and Democrats in Congress.”

A “nightmare” threat is becoming real, said Paul La Monica in CNN. So far, “rising prices are more a source of consumer complaints” than a deep economic concern. But “lingering supply-chain worries and surging cases of the Omicron variant” threaten the economy. If consumers slow their spending, then “it would be time to worry about stagflation,” a scenario in which prices rise as the economy slows. China’s “zero tolerance” COVID stance is also a factor, said Ana Swanson and Keith Bradsher in The New York Times. If China locks down factories and ports to combat the spread of Omicron, the effect on supply chains “could depress consumer confidence.”

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