Since the late 1920’s when statistics began to be officially compiled, the US inflation rate has fluctuated moderately. Except for a surge in the 1920s and 1970s, the US inflation rate remained relatively constant, at the approximate optimum level. of 2%. In the 1970s, however, the US inflation rate began to rise significantly.
What $1 bought in 1970 would be equivalent to roughly $692 in 2021. During the recession in 2008, the inflation rate was approximately 5.6%, making the April 2021 rate the highest in 13 years.
Today’s US Inflation rate for April 2021 is 4.2%. In March of 2021, the US inflation rate was 2.6%, an increase of 1.6% in the one month from March to April.
The escalation in demand results from the US economy recovering from the COVID-19 pandemic shutdown. The pandemic induced-recession is primarily to blame for the increase in US inflation rates.
Americans are paying more for energy, food, shelter, medical care services, and transportation due to supply chain shortages. The economy cannot produce fast enough to meet the burgeoning demand, thereby driving up costs significantly.
It may be too soon to predict whether the current Biden administration’s fiscal policies, including stimulus packages, increased child care tax credits, and continuing unemployment payments, and the Federal Reserve’s monetary policies, influence the US inflation rate.
Unemployment is reported to be at 6.1%, not far from the pre-pandemic level of 4.5%. Experts believe most of the stimulus money given to the American people to help with loss of income and/or stimulate the US economy was either saved in bank accounts or was held onto due to restrictions from COVID 19. Most of the stimulus money did not find its way into the US economy.
Even with the high US inflation rate, the economy in 2021 is expected to grow by a healthy 10%. The pandemic slowed the economy but with the government and states easing restrictions on social distancing and mask requirements, people moved about almost as freely as pre-pandemic levels.
In keeping up with the demand, the US inflation rate is expected to remain at 4.2% but make a sharp downturn to 1.6% in 2022. A recession is now thought to be out of the question, and a boom in the economy is predicted.
As we have learned from the past, getting the US inflation rate under control is essential to having a healthy economy. Today’s US inflation rate is an indicator that our economy is opening up at a rapid rate.
The spike in the US inflation rate appears to be temporary, with most experts believing that US inflation rates will decrease significantly soon.
Getting money into the hands of Americans may not have had the intended purpose. Still, the Biden administration is confident that the US economy is heading in the right direction nonetheless. Although the pandemic slowed down the US economy, it is coming back with a vengeance.
