The Paris-based Organization for Economic Cooperation and Development (OECD) reports that inflation will remain longer than predicted, at a rate higher than what the world has historically endured. OECD also forecasts an inflation rate of 4.4% in the U.S.
The intergovernmental economic organization, comprised of 38 member countries, added that new risks posed by the Omicron variant of the coronavirus pandemic could contribute to a global economic slowdown.
As reported in The Wall Street Journal, “The world economy could face a sharper slowdown than previously expected and a round of price declines similar to those seen in the early months of the pandemic.”
The OECD report backs up a recent analysis from Goldman Sachs that projects inflation “will get worse before it gets better”, which was published before the discovery of the Omicron variant. If the OECD report ends up coming to fruition this winter and into spring, the reality for millions of Americans may be less rosy than what Treasury Secretary Janet Yellen is predicting, as she forecasts inflation subsiding “after mid 2022.”
The OECD’s report on elevated inflation is not affecting President Biden’s message, though. Rather than realizing Harry Truman’s statement that “The Buck Stops Here,” Biden shifted blame towards Republicans this morning for “bills at kitchen tables being higher.”
President Biden’s tweet comes as advisors to the Biden Administration have pushed for messaging to shift to blaming Republicans for the nation’s economic woes, despite the fact that the Democrats control both houses of Congress and the White House.
Regardless of the political messaging, the OECD report makes clear that inflation may reach a new high of 4.4% in the United States, an average that is higher than their September prediction of 3.1% consumer price inflation.
The latest OECD report of rising inflation comes one day after Federal Reserve Chairman Jerome Powell told Congress on Tuesday that “it’s probably a good time to retire that word [transitory] and try to explain more clearly what we mean.” Powell’s admission that inflation is not transitory additionally comes after the Federal Reserve repeatedly described inflation as transitory during the spring and summer months.
The Question of Vaccine Efficacies
OECD Chief Economist Laurence Boone told The Wall Street Journal in an exclusive interview that there are real fears the Omicron variant could evade existing vaccines, which would then “hit the economy harder” than the past two years of living with COVID-19.
For now, however, it remains to be seen how the Omicron variant will affect the global economy and inflation, as more data is needed. One thing is for certain, however, and that is according to a Yahoo/YouGov Pol, 77% of Americans now say “inflation is personally affecting them, and 57% of those polled blame Biden.”
With fresh predictions that inflation will worsen and persist longer than projected, one can reasonably infer even more Americans will become fed up with inflation in the coming months.
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