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The White House argues that Mr Biden’s stimulus to infrastructure legislation and social spending would ripple over time and could improve economic capacity, relieving longer-term supply chain pressures . But the administration and the Fed are watching closely to make sure consumers don’t expect ever higher prices amid today’s inflation explosion.
“The real question is, when your boss says, ‘Hey, I’m giving you a 4% raise this year,’ are you happy or upset? Mr. Levy, the economist for Flexport, said. “Once these elements are integrated, it can be very painful to change. “
Encouragingly, consumer and financial market expectations for long-term inflation developments (typically five years) appear to have stabilized after rising slightly earlier in 2021. Nonetheless, companies expect the potential for supply chain disruptions and rising costs to persist. for a while.
“We don’t expect supply chain pressures to ease,” Mark J. Tritton, chief executive of Bed Bath & Beyond, said on a earnings conference call on Friday. He noted that the company was trying to adjust its operations to cope with the issues, including trying to carefully manage inventory.
General Motors and Honda both reported significant declines in sales from a year earlier in the three months ending in September, as chip shortages forced them to close their factories, leaving dealers with few vehicles to offer to customers. And as used cars remain scarce, their prices – one of the main drivers of inflation this year – could rise again.
The pain is felt in many advanced economies: Inflation in the euro area soared to 3.4% in September from the previous year, the highest in 13 years, according to an estimate by the statistical agency of the region released Friday.
Omair Sharif, founder of research firm Inflation Insights, said he still expects price increases in the United States to return to more normal levels by the middle of next year – but acknowledged that it was going to take longer to resolve the supply issues than anticipated even three months ago.
“We’ve just had blinders with the global supply chain,” he said.
Neal E. Boudette and Eshe nelson contributed reports.
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