Inflation update, a look into possible recession
YUMA, Ariz. (KYMA, KECY) - The government reports consumer prices went up 8.6% from May 2021 to May 2022.
It’s the biggest 12-month increase since December 1981.
The U.S. Bureau of Labor Statistics reports that Yuma county has an inflation rate of 8.3% and it’s left many wondering if we are in a recession or not.
Expert in economics and Associate Professor at Florida Atlantic University, William Luther, says we won’t know for certain until another month or so when we can see if the data for the second quarter of 2022 shows negative growth or not.
But explains his take on the inflation we are facing.
“The bulk of the increase of prices that we’ve observed is because of monetary policy," said Luther. "We’ve had just a surge in nominal spending over the last year and the federal reserve was reluctant to offset that.”
Monetary policy either spikes or restrains the growth of overall demand for goods and services in the economy.
Luther says the majority of the reason why the costs of goods are up is that our ability to produce hasn’t returned to pre-pandemic times and the Russia-Ukraine war.
“Because we had this surge in nominal spending, prices were rising more rapidly than people realized," said Luther. "We’ve also had this Russian invasion of Ukraine and that has further reduced our ability to produce by making oil and gas more expensive and disrupting global supply chains."
Nominal spending is the current dollar value of spending in an economy or the total demand in an economy.
The best advice Luther gives to those wanting to prepare ahead of a possible recession is to talk with their employer about wages.
“Given that we’ve experienced significant inflation over the last year is attempt to renegotiate their wages. Now is really the time to do that, to go to your employer," said Luther.
He continued to say once it is apparent we are in a recession, it will become a difficult time for employers to raise one’s pay.
A Forbes Advisor survey says 2 out of 3 Americans between the ages of 26 to 57 say they’re dipping into their savings as prices for goods and services skyrocket.
