United States – Rising Inflation

October 1, 2021

United States – Rising Inflation 

Padmini Arhant

The great reset from World Economic Forum, Davos, Switzerland and COVID-19 induced global economy shut down in 2020 extended into mid 2021 cost lives and livelihoods across the spectrum.  The federal and certain states stimulus checks to alleviate dire financial difficulties among vast majority of population in the United States might have provided some relief but did not end economic plight. 

The retail industry together with millions of small and medium size businesses paid enormous price in the pandemic year despite economic assistance to some in the form of paycheck protection program to retain employees on payroll and other small business loans to survive the lockdown period. 

The current inflation is reflected in essential consumer goods and services posing a major challenge for average citizens in the absence of necessary economic growth. The job market is yet to project reasonable employment status that guarantees steady and stable household income. Amid grim economic situation, the all time high inflation is a serious concern for citizens with minimal or no income. 

The Federal Reserve intervention adjusting the prime rate on interest and other borrowings to curb inflation might be standard response. Following the federal reserve course in this regard, the impact on the housing market would not be entirely favorable to first home buyers or homeowners planning to sell or refinance upon interest rates hikes to correct rising inflation.

The balancing act weighs heavily on the Federal Reserve monetary policy and government’s fiscal policy to control inflation. 

United States Congress multi trillion dollar spending on infrastructure and social welfare bills arguably to stimulate economy with job creation and consumer spending underestimate underlying repercussions in exceeding limits especially the customary debt ceiling raised under every administration to circumvent explosive budget deficit. 

The luxury of printing money for various purposes in the wish list is a privilege not necessarily a game changer in delivering the desirable outcome. The fact of the matter is at the end of the day the economic ramifications adversely affect average citizens saddled with generational debt beyond recourse. The national debts in return burden the economy attracting bidders in the global market to leverage positions in many aspects.

The Congressional spending strategy deviating from prudent economic stimuli signal precarious conditions beginning with inflation and diminishing consumer power. The employment figures remaining lower than the expected margin and economic activities not fully resumed in the declining pandemic, the inflation impetus corrective measures to avert major economic crises. 

United States Congress and Federal Reserve combined efforts to stymie inflation represents the priority prior to any other economic endeavors in the multi-trillion dollar spending proposals pending bipartisan approval. 

The tax relief to businesses facilitating hiring, expansion and development are key factors in stimulating economic progress rather than the contrary that invariably drives major corporations offshore viz. China or other destinations. Similarly, small businesses and retail industry in the aftermath of prolonged economic shut down have no means of revival. The tax incentives to this sector is appropriate and urgently required for renewal. 

The government spending downsizing federal agencies and other areas of sprawling activities yielding no benefits wasting tax dollars are to be focused in containing expenditure. 

The staggering national budget deficit with phenomenal government undertakings in the backdrop of printing money is not healthy for the dollar as international reserve currency confronted with alternatives in the global economy. 

In conclusion, inflation drains common citizens wallet and depletes economy leading to banana republic experienced in many parts of the world. The monetary and fiscal authorities immediate actions to stabilize economy and escalating inflation is the preliminary step towards economic recovery.

Thank you.

Padmini Arhant

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Written by Padmini Arhant · Filed Under Economy, Featured 

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