Willie R. Tubbs, FISM News
It took less than a day for the cracks to show in the Biden Administration’s claim that inflation will lack staying power.
Thursday, hours after White House Press Secretary Jen Psaki assured Americans that inflation would be “temporary and not long lasting,” Treasury Secretary Janet Yellen, a noted economist who has fans in both major political parties, offered a contradictory opinion during an interview on CNBC.
“I think there’s a lot of uncertainty that is related to what’s going on with Russia in Ukraine,” Yellen said on CNBC’s “Closing Bell” program. “And I do think that it’s exacerbating inflation. I don’t want to make a prediction exactly as to what’s going to happen in the second half of the year. We’re likely to see another year in which 12-month inflation numbers remain very uncomfortably high.”
Early in 2021, when inflation spikes were still novel, Yellen was among the Biden Administration officials to predict inflation would be transitory. However, she was also among the first officials to break from the party line, declaring in December her belief that it was unwise to insist upon calling inflation temporary.
In December, Yellen said she believed the Omicron variant of COVID-19 would serve to prolong inflation. Thursday, she pointed to Russia’s invasion of Ukraine as another factor that would lead to more months of struggle.
“We have seen a very meaningful increase in gas prices, and my guess is that next month we’ll see further evidence of an impact on U.S. inflation of Putin’s war on Ukraine,” Yellen said. She added, “Russia, in addition to exporting oil … Ukraine and Russia are major producers of wheat. We’re seeing impacts on food prices, and I think that can have a very severe effect on some very vulnerable emerging market countries.”
As calculated by Fox Business, the current inflation rate of 7.9% is expected to cost the average American just under $300 more per month to support themselves. An alarming jump in fuel costs – the national average is currently about $4.30 per gallon following a 6.6% rise in gas prices in February – are expected to catapult that number even higher.
NerdWallet, a personal finance company, offers a free calculator that tabulates how inflation affects the value of money. According to the NerdWallet calculator, as of today, a person would have to spend $105.06 to get the same value for products that the consumer purchased for $100 in 2020.
Despite her sour outlook for inflation, Yellen said she believed Federal Reserve interest hikes will ultimately prevent a recession, which would in theory prevent job losses.
“I think that the labor market will remain strong,” Yellen said. “I think it’s appropriate for them to take action, but a soft landing is what I expect.”
As reported in the Washington Post, inflation has grown so exorbitant that it is erasing pay raises earned by some employees, which means that even if people retain their jobs, their quality of life will still be negatively impacted.