Utah Economist: Inflation Spike Is Temporary
SALT LAKE CITY – We’ve all felt the pain of the recent spike of inflation every time we’ve taken out our wallets. KSL-TV spoke with an economist from the U who said in order to understand what’s happening with inflation, you have to look to the pandemic and beyond.
“Why are we seeing this impact out there in the economy and what’s the appropriate response to that particular impact which may be unlike anything we’ve seen in the last 100 years,” said Phil Dean, public finance senior fellow at the University of Utah Gardner Institute.
Dean said he’s never seen so much attention paid to inflation in his entire career and that the pandemic skewed the typical economic factors that might affect a normal financial cycle.
“Fundamentally, the economy is all of us, right? It’s all of us going out and making decisions and it’s very complicated, sometimes it’s oversimplified, the whole process,” he said. “I do think policymakers can influence what happens.”
That influence came in the form of the Fed who kept interests rates low and as the government pumped stimulus and tax credit funds into the marketplace.
Couple that with the pandemic, which changed our buying behavior for months, and some kinds needed to be worked out.
Dean expressed optimism that the current price spikes are temporary, and within six to nine months, he expected some normalization, if there is such a thing.
Two percent inflation, the amount prices go up every year, is the target for policymakers.
It’s expected interest rates could creep up as well, which will affect the price of goods, but Dean said the pandemic impact will work itself out.
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