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Economists Make Dire Prediction About Inflation and Supply Chain Shortages Going Into 2022

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High inflation will last well into 2022, economists say, indicating that supply chain bottlenecks will keep increasing prices and curbing production.

Experts expect to see average inflation of 5.25 percent in December, slightly down from the current maximum predicted to be 5.4 percent, according to The Wall Street Journal.

If inflation stays around its current level, Americans will experience the longest period during which inflation has stayed above 5 percent since 1991.

“It’s a perfect storm: supply-chain bottlenecks, tight labor markets, ultra-easy monetary and fiscal policies,” Michael Moran, Daiwa Capital Markets America’s chief economist, told the Journal.

Economists believe that consumer price inflation will drop to 3.4 percent by June 2022 and 2.6 percent by the end of 2022.

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These figures remain 1.8 percent above the inflation level seen before the COVID-19 pandemic.

Experts also cut growth forecasts for 2021 from 7 percent during a July survey to 3.1 percent in the third quarter, according to the article.

Fourth-quarter growth predictions were also lowered from 5.4 percent to 4.8 percent.

“Consumer spending, and by extension GDP growth, is being limited by high rates of inflation eroding the real purchasing power of consumers,” Michael Brown, Visa’s principal U.S. economist, told the Journal.

Will inflation and supply chain shortages get worse?

Roughly half of the economists surveyed by the WSJ believe supply chain bottlenecks pose the greatest threat to economic growth in the next 12 to 18 months, while nearly 20 percent of experts highlighted labor shortages as such.

Economists also lowered their concerns of the coronavirus’ impact on economic growth, according to the report.

Only 8.2 percent of experts surveyed believe that the pandemic will stunt growth.

“Fundamentally, it’s Covid and people’s reaction to it that’s leading to labor shortages and supply-chain bottlenecks, which in turn is feeding into higher inflation,” Leo Feler, senior economist at UCLA Anderson Forecast, told the Journal.

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A version of this article appeared on the Daily Caller News Foundation website.

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