The overall economy looks healthy for now, with a robust job market and extremely low unemployment. But many economists warn that the Fed's steady credit tightening will likely cause a downturn.
Used cars for sale are parked roadside at an auto lot in Philadelphia, Tuesday, July 12, 2022. On Wednesday, July 13, 2022, the Labor Department will report on U.S. consumer prices for June. For the 12 months ending in June,And that was nothing next to what energy prices did: Fueled by heavy demand and by Russia's invasion of Ukraine, energy costs shot up nearly 42% in the past 12 months, the largest such jump since 1980.
Under Chair Jerome Powell, the Federal Reserve never anticipated inflation this severe or persistent. Yet after having been merely an afterthought for decades, high inflation reasserted itself with ferocious speed as shortages of labor and supplies ran up against a propulsive rise in demand for goods and services across the economy.In February 2021, the consumer price index was running just 1.7% above its level a year earlier.
The overall economy looks healthy for now, with a robust job market and extremely low unemployment. But many economists warn that the Fed's steady credit tightening will likely cause a downturn.Good news — mostly. When the pandemic paralyzed the economy in the spring of 2020 and lockdowns kicked in, businesses closed or cut hours and consumers stayed home as a health precaution, employers slashed a breathtaking 22 million jobs.
With demand up and supplies down, costs jumped. And companies found that they could pass along those higher costs in the form of higher prices to consumers, many of whom had managed to pile up savings during the pandemic.
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