Inflation concerns? Not yet, Illinois economist says | Illinois

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(The Center Square) – As inflation continues to surge across the country, an Illinois economic professor said he’s not overly concerned about the coming year.

U.S. consumer prices increased solidly in September as Americans paid more for food, rent and a range of other goods. Food prices jumped nearly 1% last month, the largest rise in food prices since April 2020 and was driven by an increase in the cost of meat.

With prices likely to rise further in the coming months with higher energy costs expected to contribute, Federal Reserve Chair Jerome Powell’s assertion that high inflation is transitory could be put to the test.

Illinois State University professor George Waters said the disruptions in the supply chain are to blame.

“Absolutely, I think that is the major story,” Waters said. “All the stories you hear about supply chain problems that can drive up prices for individual goods quite a bit in the short term.”

Supply chains have been clogged up by strong demand as economies advance and COVID-19 restrictions are lifted, thanks to more than $10 trillion in global economic stimulus – much of it in the United States. The pandemic has caused a global shortage of workers needed to produce raw materials and move goods from factories to consumers.

Waters said the price hikes will be sporadic over the next year.

“I’m not overly concerned about overall inflation,” he said. “I think that it will be largely individual prices responding to supply chain problems, but I think that will sort itself out in the next nine months or so.”

With the number of people voluntarily quitting their jobs hitting a record high in August and at least 10 million unfilled positions, wage inflation could rise further as well.

In the latest University of Illinois Flash Index, which is a gauge of the Illinois economy, the October rating fell to 105.4. Researchers said the decline followed a broader national pattern of slower recovery from the short, but sharp COVID-19 recession of 2020.

The index is constructed with the reading of 100 the dividing line between expansion and contraction of Illinois’ economy. The key focus of the index is not whether it is increasing or decreasing, but whether and how much it is above or below the 100 level.

“This drop is likely the result of the return of some restrictions because of the emergence of the Delta variant, along with supply chain bottlenecks that have slowed the economy,” said U of I economist J. Fred Giertz, who compiles the monthly index for the Institute of Government and Public Affairs. “While the short-term outlook remains clouded, there is still optimism for 2022.

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Caleb Alexander

Caleb Alexander

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