Fox Business quotes one economist as arguing that the backbreaking inflation that Americans have been witnessing could have been prevented if the administration of President Joe Biden acted sooner than it did.
The economist is Mohamed El-Erian, the chief economic advisor of Allianz. El-Erian made his argument that the inflation we are now seeing could have been prevented, during an appearance Sunday on CBS’s Face the Nation.
During that appearance, El-Erian said that the inflation that we are now witnessing is the result of “a combination of things happening.” Those things, according to him, include the Russia-Ukraine conflict and energy transition.
But, El-Erian said that these things also include something else: the fact that, early on, the Federal Reserve misjudged the trajectory of inflation which led to it falling behind.
The reader may remember that the Fed and the Biden administration, for the longest time, insisted that the inflation that Americans were witnessing was a “transitory” phenomenon caused by the coronavirus pandemic. Whatever the cause may be, we can now certainly say that the ongoing inflation is anything but “transitory.”
The Labor Department, last week, released its latest consumer price index. It showed that inflation rose to 8.6% in May, which puts it at a four-decade high.
The price of just about everything is up: food, rent, and more. Among the most palpable of these price increases is that of gasoline, which is averaging above $5 per gallon across the nation. Moody’s reports that this inflation will cost American families an additional $5,520 per year.
This inflation certainly isn’t “transitory.” And, economic experts are predicting that a recession is now in sight.
It all “could have been avoided”
El-Erian insisted, during his CBS appearance, that this suffocating inflation “could have been avoided if early action had been taken” by the Fed.
“I was very puzzled when a year ago so many people were so confident that inflation was transitory,” he said. “There was so much we didn’t understand about the post-COVID inflation that humility would have been a good idea.”
El-Erian went on to suggest that, now, inflation may reach 9% and that a recession is certainly possible.
It appears that this is something else that we can thank President Biden for.