The American economy was hit with more inflation from April through June than any other time since 1982, the Commerce Dept. said Thursday, confirming the number that was revealed in earlier predictions about second-quarter inflation.
The Personal Consumption Expenditures price index increased at an adjusted yearly rate of 6.5 percent in Q2. Excluding the volatile but very important categories of energy and food, prices increased 5.8 percent, the biggest jump in 38 years.
The PCE price index is the Fed’s preferred measure for inflation, in part due to it allowing for substitutions of goods when prices shift and so it is believed to better track the prices that are paid by consumers. It is created by the Commerce Dept., while the CPI and the Producer Price Index are products of the labor dept.
The overall economy increased at a 6.7 percent yearly pace, one-tenth higher than the estimate released one month back and two-tenths higher than the initial estimate of Q2 growth.
This is the government’s third and final growth estimate for the quarter. Economic growth back in April through the June time period proved very disappointing even as inflation was much more than expected. As recently as the close of July, economists were predicting 8.3 percent growth for that time.
The economy basically failed as the Biden White House and Washington Democrats took over the U.S. government. The Q2 expansion was barely quicker than the 6.3 percent expansion in Q1, despite the vaccine rollout quickly created under the Trump White House and huge amounts of stimulus money being pumped into the system.
The upward momentum of GDP growth was because of higher levels of consumer spending, which increased by a 12 percent yearly rate. That growth was helped by stimulus checks, suspensions of student loans repayments, and large unemployment payments but not also met with expanded capacity in American businesses, creating more inflation. Indeed, the stimulus and other Democrat measures might have held back the supply side of our economy by disincentivizing people to work, making it hard for businesses to hire new workers.
Author: Blake Ambrose