July 3, 2022

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US inflation is developing on a broad front

US inflation is developing on a broad front

Inflation rose to 6.2 percent in the United States from 3.7 percent in the Netherlands in October. This is the highest level in 30 years, higher than economists expected and 5.4 percent in September. ‘Inflation is growing exponentially,’ says PNR economist Hon de Zhang.

Energy prices played a major role in October, but not just energy. You can now clearly see the consequences of supply chain disruption, ”said De Jong. He also sees inflation, which he calls’ reopening sectors’: ‘People are trying to make up for the loss by raising prices. In the labor-intensive sectors there is obviously a higher wage increase that they pass on. At its peak, rising housing prices have begun to outpace rents. ‘

De Zhang attributes the different approaches to the economic shock that the two have to deal with to the fact that inflation is more severe in the United States than in Europe. ‘We tried to keep people in their jobs, for example now through projects, we have had great success. It is not in the United States that they have chosen to bargain for job losses and provide substantial income support to the people. ‘

In the United States, about 20 million jobs were lost in the last 2 months, or one in seven Americans losing their jobs. ‘This is a big shock, and that shock is greater in the United States than in Europe, so there are more obstacles. Are we going in the direction of six percent and more? I do not think so because we have a different approach. ‘

De Zhang does not need to think that it will be bad for the U.S. economy in the long run: ‘That massive recovery in the U.S. economy will lead to a positive, big performance boost.’ Finally, the economist thinks that the US Federal Reserve will raise interest rates ‘sooner than they thought’. Definitely next year. Or will our interest rates go up? “It’s not clear, but in the end we can not allow this to take its course.”

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