The U.S. economy is suffering from overwhelming inflation and the dilemma caused by supply chain disruption and labor shortage, with the Consumer Price Index (CPI) staggeringly growing by seven percent year-on-year last December, according to official reports issued on Wednesday.
The U.S. Department of Labor reported on Wednesday that the CPI, one of the most frequently used statistics for identifying inflation, increased by seven percent year-on-year in December last year, the largest since June 1982.
The U.S. Federal Reserve on Wednesday published its first Summary of Commentary on Current Economic Conditions this year, indicating that the economic activity in the country keeps mild expansion but the broken supply chain and insufficient workforce have been disrupting the development of many regions.
Also known as the Beige Book, the summary is based on the latest survey results from 12 regional Federal Reserve Banks.
According to the Beige Book, most tourism, leisure facilities, hotels and restaurants in the Federal Banks' districts have seen the number of customers drop. The recovering manufacturing sector can provide more vacancies and push up salary of the low-skilled workers, but labor shortage persists and the consumer price keeps surging due to difficulties in transportation and supply chain.
According to the report, the surging price on food, gas, house rent and other living necessities are all financially burdening households in the United States. Amid the pandemic, higher demand for cars, furniture and home appliances are jamming the ports and warehouses while also worsening the shortage on semiconductor components.
The fuel prices soared 50 percent compared with the previous year with disrupted supply chain of merchandises and service, so did the case of natural gas. Many American families have to spend 30 percent more on heating system based on expensive natural gas.
On the other hand, food price has been squeezing the low-income American families, as the grocery price rose by 6.5 percent last year with a higher growth on the meat and egg price of 12.5 percent, according to statistics.
Statistics from the National Federation of Independent Business (NFIB) shows that in December of 2021, nearly half small size enterprises planned to raise the price of their products or services in the next three months.
Inflationary pressures in the country are expected to last well into the middle of the year, Federal Reserve Chairman Jerome Powell said on Tuesday. The Fed may further raise interest rates and shrink its balance sheet earlier and faster in response to persistent high inflation.
The Federal Reserve of the U.S. publish the Beige Books eight times each year. The book serves as an important reference for the meetings of the Federal Open Market Committee (FOMC). The next FOMC is due to convene on Jan. 25 to Jan. 26.