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Inflation 101

Inflation 101. Experts say that the current inflation level of 8.6 percent is mostly due to three factors. . The first is a solid demand for products. Increased wages and solid savings have meant that Americans want to spend. The second is a diminished supply of products. The strains on the global supply chain due to the pandemic have meant that the increase in demand had been unmet by available products. The third has to do with increased pressures on the service sector. As costs for products rise, so too do costs for experiences such as eating out and travel. Analysts look to the Consumer Price Index and the Personal Consumption Expenditures index to make judgements on core inflation. Specifically, the Vice Chair of the Federal Reserve stated recently that he's "going to be looking to see a consistent string of decelerating monthly prints on core inflation.". The Federal Reserve has responded to inflation by raising interest rates to slow wage and price growth and to reign in demand. Analysts say the trick to a soft landing is to even out demand with increased supply, without much more federal intervention. The path toward a soft landing is a very narrow one — narrow to the point where we expect a recession as the baseline, Matthew Luzzetti, Chief U.S. Economist at Deutsche Bank, via 'The New York Times. There continues to be deep pockets of pent-up demand, Anthony G. Capuano, Marriott International, via 'The New York Times. Unlike previous economic cycles and economic downturns, here you have this added dimension, which was folks were locked down for 12 to 24 months, Anthony G. Capuano, Marriott International, via 'The New York Times

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