The federal government today released an update on inflation for the month of September, a rise of 0.4 percent in September compared to a 0.6 percent rise in August, according to the U.S. Bureau of Labor Statistics. That means inflation is still too high, says CEI Senior Economist Ryan Young.
“The latest CPI shows that inflation is holding steady but at about double its target rate. This means the dollar has now devalued by 17 percent since COVID hit, representing a loss of more than $7,000 per household. This was avoidable.
“The Fed overreacted to the COVID slowdown and doubled its balance sheet. Congress and Presidents Trump and Biden used COVID as an excuse to go on a multi-trillion dollar spending spree on everything from semiconductors to student loans.
“We are past the worst of that surge, and the Fed has mostly been doing the right things for the last year and a half. That has gotten inflation down from nine percent to around four percent. But it will likely stay above its two percent target for a while because markets expect another big stimulus spree at the first sign of a downturn or a crisis.
“The Fed and the political branches need to restore their lost credibility by restraining themselves for at least a little while. When inflation expectations go down, so will inflation itself.”