AP Photo/Evan Vucci On Friday, the U.S. Department of Commerce again confirmed the ominous warning sign of inflation as the U.S. economy adjusts to global economic trends, the winding down of the COVID-19 pandemic, and President Joe Biden’s profligate government spending. While many economists and policymakers claim that the recent uptick in inflation is temporary, a recent Deutsche Bank report warned of a repeat of the 1970s.
The personal consumption expenditures (PCE) index rose 0.4 percent in May , slightly less than the 0.5 percent increase economists predicted, MarketWatch reported . Over the past year, consumer prices have shot up 3.9 percent, reflecting the biggest gain since 2008 when oil prices hit a record high of $150 per barrel.
This PCE number is double the Federal Reserve’s 2 percent goal, but officials have downplayed the increase. Fed leaders argue that prices will lower next year as the economy returns to normal, most people go back to work, and widespread shortages of labor and supplies fade away.
The core PCE price index, the Fed’s preferred measure of inflation, rose 0.5 percent in May, hitting 3.4 percent, above the 3.1 percent April figure.
As The Wall Street Journal reported , the Commerce Department’s 3.9 percent inflation measure represents a smaller leap than the 5 percent jump in the consumer-price index (CPI) the Labor Department reported earlier this month. CPI typically runs higher than the PCE index, yet both measures rose significantly in the past year.
“The CPI aims to capture changes in the cost of living […]