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Thursday, June 19, 2014

US Middle Class Now Must Cope With Rising Inflation

Buffeted by slow growth and too few jobs, Americans now have to deal with more inflation.

In May, consumer prices rose at more than a 4 percent annual pace, and inflation has been heating up the last several months.

Rapid growth in China is boosting demand for agricultural products, and prices are up for beef, pork and other food products.

Core inflation — prices less food and energy — after remaining fairly subdued for several years, is also accelerating. Americans may be facing inflation greater than 3 percent — or even 4 percent — for the balance of this year and next.

The Federal Reserve will be faced with a Hobson’s choice — tighten credit to combat inflation or continue printing more money in hopes of igniting growth. (Editor's Note: A Hobson's choice is a free choice in which only one option is offered.)

Here are five things to know about higher inflation.

1. More Money Won’t Boost Growth

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1 comment:

Anonymous said...

I like how the article blames Chinese demand, and forgets that we've pumped trillions of dollars into the economy, while Russia and China are dumping the dollar as a way to conduct international trade.

Let's be honest. The price of everything is going up because more dollars are chasing the same amount of goods, and because less people want to hold dollars.