July 6, 2022

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The United States is facing the highest inflation rate in four decades

The United States is facing the highest inflation rate in four decades

Even those with high salaries don’t get a real raise, since the adjustment won’t reach the 8% needed to restore inflation.

Estimated reading time: 3 Minutes

Despite the low unemployment rate in the United States (USA), the country has no reason to celebrate. This is said because the country is facing the highest inflation rate in the last 40 years. Therefore, this makes the purchasing power of individuals decline significantly. To give you an idea, in March of this year, there was an 8.54% rise in inflation, compared to the same period in 2021. The rise was due to higher food and fuel prices.

High inflation rates in the United States

According to the teacher EconomieDennis Jansen,”I don’t know if we can pass judgment on an economic crisis, but I would say that this is a huge credibility crisis for the Fed (the Fed, the US central bank)Furthermore, Janssen explained that “The Fed has pledged to keep the inflation rate at 2%, and we’re much further than that.“.

According to Janssen, the last two rounds of emergency aid, which occurred between the end of the Trump era and the beginning of the Biden era, pumped money into the market. However, the Fed did not move quickly to stem the effect of the maneuver. Last year, when inflation reached 4%, the central bank did nothing. They waited until March of this year to finally raise rates.” explains.

Thus, the purchasing power of Americans has fallen dramatically. Even those who are highly paid do not get a real raise. This being said, because the adjustment will not reach the 8% needed to restore inflation.

As a result, by paying more to live in the same way, US residents are seeing rents increase by more than 5%. Meanwhile, groceries increased by 10%, and gasoline by 12%. Finally, Jansen states the following:

“Although everyone has to pay for the consumption of basic necessities, such as food and, in most cases, petrol, since they have to travel, the poorest suffer the most. The share of income they allocate for this purpose is much greater than that of their own. Those at the top of the social hierarchy. In other words, everyone feels inflated, but perhaps only the poor suffer from it.”

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