The fundamentals of the U.S. economy remain strong, though the likelihood of a recession next year is increasing, according to Chief Economist at the U.S. Chamber of Commerce, Curtis Dubay. Speaking to Kentucky Chamber members on a webinar on Tuesday, Dubay discussed several key economic issues facing the country, including inflation, supply chain challenges, and the ongoing workforce shortage.
Inflation, Dubay noted, has surged in recent months due largely to monetary policy decisions made by the Federal Reserve. Other contributing factors include supply chain disruptions, fiscal stimulus during the height of the COVID-19 emergency, events overseas, and the workforce shortage. In response to the growth of inflation, the Federal Reserve recently announced an interest rate hike, and Dubay told Chamber members to expect another increase this week. These actions could result in an economic slowdown, which Dubay anticipates would be short-lived because the underlying structure of the U.S. economy remains strong.
A new report last week showed that inflation, as measured by the Consumer Price Index, surged to 8.6 percent in May, the highest year-over-year increase since December 1981. The report underscored the fact that high prices are lingering longer than many had expected.
Dubay noted that some public figures and commentators have sought to blame inflation and rising prices on corporations and businesses. This tactic, he explained, is a common one and has been utilized before during previous periods of inflation in U.S. history. Ultimately, market forces, such as those highlighted by Dubay during today’s webinar, are the real drivers of higher prices.
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