ORANGE COUNTY, Fla. — After years of slowly plodding along, the United States economy’s inflation rate has skyrocketed, standing at more than twice the levels targeted by the Federal Reserve for several months in a row.
The rate stands at 5.4% for the month of September, which ties a few other months in recent years and is the highest rate since 1982.
The increase has caused prices of everyday items to go up, hitting consumers in the checkout aisle. On Wednesday, the Social Security Administration announced monthly payments to retirees would increase by 6% to help pay the higher bills. According to the Consumer Price Index, the only thing that has not increased in 12 months is medical care.
University of Florida Warrington School of Business Economist Dr. Amanda Phalin said the high inflation wasn’t causing too much concern for her.
“It’s transitory,” she explained, “And because inflation has been running low for so long.”
Phalin said this round of inflation is caused by shipping bottlenecks on the West Coast, delaying goods from reaching store shelves. President Biden, sensing a looming crisis with the holidays approaching, has increased his focus on the ports of Los Angeles and Long Beach recently. On Wednesday, he announced a plan to shift them to 24/7 operations to ease the backlog.
That’s different from the inflation seen 30 years ago, which the economist said was caused by consumer demand. She added that she was keeping her eye on this type of inflation as the next round of vaccines prepares to roll out.
“I really think that once kids under 12 are able to be vaccinated we’re going to start seeing a lot of spending on the consumer side,” she said.
Inflation is not necessarily a bad thing, she added. The United States targets a 2% inflation rate every year because inflation is typically a sign of healthy economic growth.
Phalin said the Federal Reserve recently adjusted its approach to inflation. Before, two percent was considered the goal every month. She said the new line of thinking is to let that amount be the average over time, even if some months are above or below it, which she said was more sustainable.
“We entered the Great Recession with a higher rate of unemployment than we would have had [with a] normal complete recovery after the 2001 recession,” she said. “I think that coming out of the Great Recession, where rates have been kept on the low side, we really want to try to spur more economic activity.”
When the shipping woes — and any inflation caused by demand — is over, she said prices would again stabilize.