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Inflation reaches 7% in the United States, a level not seen since 1982

This is a first in the United States in forty years. Inflation there reached 7% in 2021, the highest figure since 1982, in the wake of the two oil shocks of the 1970s. Excluding energy and food, the increase amounts to 5.5%, according to published figures Wednesday, January 12 by the Bureau of Labor Statistics (BLS, the statistical agency of the Department of Labor), a strong surge compared to November 2021 (4.9%).

It has now been three months since the increase in prices has been at an annual rate of over 6%. She has become the number one political subject for President Joe Biden, especially since salaries do not follow. They may have grown nominally 5.8% year on year, according to the BLS, the pace is slowing, since this increase was 6% in November 2021.

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As a result, real weekly hourly wages fell about 2%, according to the BLS. The purchasing power of Americans is declining. Over one year, the price of gasoline has increased by half and that of new vehicles, by 11.8% (+ 37% for used ones). The cost of housing, for its part, appreciated by 4.1%, that of transport, by 4.2%, and that of food, by 6.1%.

This eagerly awaited figure comes in the wake of those of employment, which disappointed with 200,000 job creations in December 2021. Over the year, the country created 6.4 million jobs, a record figure which is being used Joe Biden, but the absolute level of employment, which has always served as a benchmark in the United States, remains 3.6 million lower compared to February 2020, before the outbreak of the Covid-19 pandemic.

A failure for the US Federal Reserve

In contrast, the unemployment rate fell to 3.9% in December 2021, from 6.7% a year earlier. This paradoxical phenomenon is linked to the withdrawal of Americans from the labor market. Indeed, the employment participation rate is 61.9%, against 63.4% before the health crisis. This decline can be explained by several reasons: retirements, women who do not return to employment as long as the care of their children at school is not ensured while the pandemic continues, and a phenomenon called the « great resignation »: young Americans no longer accept to work under any conditions and at any cost.

This persistent inflation constitutes a setback for the Federal Reserve (Fed), which has continued to assert that the phenomenon was transitory, before changing its mind. Its president, Jerome Powell, spoke about the causes of this error to Congress on Tuesday, January 11. First, the bottlenecks in the global economy have turned out to be much more lasting than expected, whether it be port congestion or the semiconductor shortage, which is preventing the auto industry. to revive. Then, because of the Covid, Americans increased their demand for goods – which sharpened production tensions – and reduced that of services, whose prices even jumped due to the lack of labor. works in catering, leisure and transport.

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In order to fight inflation, the Fed is now considering at least three short-term interest rate hikes. The first ascent could take place at its meeting in March. The prospect has pushed ten-year interest rates up to 1.72%, but Wall Street, after a difficult start to the year, seems convinced it can live with higher rates and inflation. On Wednesday, the Nasdaq posted, shortly after the opening of the stock market, up 0.5%, while the S&P 500 index gained 0.4%.

Joe Biden is partly responsible for this outbreak, fueled by his stimulus plan voted in March 2021, which was deemed excessive and out of time by several renowned New Keynesian economists, such as Larry Summers, former Treasury secretary to Bill Clinton, and Olivier Blanchard, the former chief economist of the International Monetary Fund. The White House tenant has chosen to accuse companies of being responsible for price increases due to abuse of dominance.

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