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Tags: white house | inflation rate | cea | cpi

White House Suggests Inflation Spike Could Continue for Years

brian deese talks to press
National Economic Council Director Brian Deese talks to reporters during the daily news conference in the Brady Press Briefing Room at the White House on July 02, 2021, in Washington, DC. (Chip Somodevilla/Getty Images)

By    |   Thursday, 15 July 2021 11:01 AM EDT

The White House signaled this week that the recent inflation rate spike, which was attributed to semiconductor shortages due to the demand from the auto industry, could last for years, according to the Washington Examiner.

"Inflation as measured by CPI increased at a 5.4% rate year-over-year last month and 0.9% month-over-month. Core inflation — without food/energy — rose 4.5% year-over-year and 0.9% month-over-month. A large part of the increase is due to cars and pandemic-affected services," the White House Council of Economic Advisers wrote on Twitter.

"Cars once again accounted for a large share of the increase. Used cars, new cars, auto parts, and car rentals together made up about 60 percent of core month-over-month inflation," the council added.

"We fully expect these bottlenecks to be temporary in nature and to resolve themselves over the next few weeks," Sameera Fazili, the deputy director of the National Economic Council, told reporters last month. "These are good problems to be having. Demand came back much quicker than even companies expected."

NEC Director Brian Deese said in a speech that the White House is "hearing from industry participants that you should expect some improvement sequentially over the second half of this year."

However, one semiconductor engineer with Intel told the Examiner, under the condition of anonymity, that it will most likely take manufacturers a year or more to get production to match the level of demand from auto makers, which the engineer said is "so high" that Intel missed its commitments for the second quarter of this year by "some percentage" and will likely see a "short miss" in quarter three.

"We don’t have a clear plan of resolving that," the engineer said, noting that although Intel began building new semiconductor manufacturing facilities earlier this year, that still won’t be enough to meet the current level of demand. 

"We're building this big fab we announced in Arizona. That's going to add a couple million square feet to our fab there, and we're constantly building in Oregon. But, I think the timeline to be getting new tools on to expand our capacity is a couple of quarters," they said. "So, I would say our capacity isn't probably going to be able to meet customers' demand for something like a year to two years."

The Examiner notes that the two-year time frame lines up with a recent white paper that was released by CEA Chairwoman Cecilia Rouse and the economists Jeffery Zhang and Ernie Tedeschi earlier this month, which suggests that ""the inflationary period after World War II," which lasted for nearly three years, "is likely a better comparison for the current economic situation than the 1970s and suggests that inflation could quickly decline once supply chains are fully online and pent-up demand levels off."

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Politics
The White House signaled this week that the recent inflation rate spike, which was attributed to semiconductor shortages due to the demand from the auto industry, could last for years. "Inflation as measured...
white house, inflation rate, cea, cpi
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2021-01-15
Thursday, 15 July 2021 11:01 AM
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