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亚马逊云账号(www.2km.me)_Why economists got it so wrong on US inflation

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ECONOMISTS are getting a dose of humility on forecasting inflation after a resurgent coronavirus, a tenuous global supply network and stimulus-fueled consumers combined to send the United States prices well beyond the expectations of Wall Street and policy makers.

The government’s latest inflation read on Wednesday showed a 6.2% annual jump in consumer prices that exceeded all projections. Previously confined to categories mostly associated with the economy’s reopening, the October data indicated a broadening of inflationary pressures.

Forecasting inflation “has been incredibly challenging” over the past year and will remain tough, said Matthew Luzzetti, chief US economist at Deutsche Bank AG. “It is difficult to feel comfortable with a view that you are building in enough price pressures at the moment, and risks remain skewed to the upside for the inflation outlook.”

Since the start of the year, economists have been forced to ratchet up their projections for consumer price growth. What was once expected to be a bit of mirage, with so-called base effects distorting the figure higher, has proved to be a much more persistent problem.

Federal Reserve (Fed) chairman Jerome Powell and many of his colleagues have repeatedly said this year that inflation pressures will prove transitory. Last week Powell said he won’t entertain interest-rate increases until the labour market heals further, even though inflation could run hot for months.

Some prominent economists, including former Treasury Secretary Larry Summers and former New York Fed president Bill Dudley, have been warning about higher and more persistent inflation for nearly a year.

Goods rotation

Many expected the vaccine rollout to embolden Americans, whose savings grew from government financial support, to transition more of their disposable income to services.

President Joe Biden’s US$1.9 trillion (RM7.9 trillion) American Rescue Plan, passed in March, included an extension of enhanced unemployment benefits and US$1,400 (RM5,824) cheques for millions of consumers.

The thinking was that as more people travelled, dined out and attended entertainment venues, the less they would spend on merchandise. That would, in turn, help remove some of the strains on the supply chain.

But the Delta wave of the virus kept massive pent-up demand skewed toward merchandise and added further strain to supply chains, particularly in Asia, said Ryan Sweet, head of monetary policy research at Moody’s Analytics Inc.

Retail sales are well above pre-pandemic levels, while services spending has yet to catch up.

“A big theme that people anticipated over 2021 was this big rotation within consumer spending from goods to services, and while that has happened to an extent, goods spending has exceeded expectations,” Luzzetti said.

Continued strength in goods spending put added pressure on a fragile supply chain. Lean domestic inventories forced US producers and retailers to step up import orders. At the same time, other economies around the world were stirring from their pandemic-related lockdowns.

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