With inflation remaining one of the main issues on American minds according to an NPR/PBS Newshour/Maris poll, experts in business and economics have continued to theorize on inflation itself and the implications of this economic trend into this new year.
In an article by Davidson College, several experts shared whether inflation will cause the economy to fall but land softly or end up with a big crash.
One of the experts, Jennifer Streaks, a senior personal finance reporter for Insider gave her thoughts on this question.
“When the housing market starts to suffer, it indicates that every other sector is going to start suffering at some point,” she said. “It’s a harbinger for what’s coming down the road.”
This advice on watching the housing market is more of a warning to watch to be prepared in case a bad economic crash occurs soon.
Another expert, Siobhan O’ Keefe gave her thoughts on inflation as assistant professor of economics at Davidson College but on what measures may lead to a worse situation.
“The labor market has continued to be more robust than expected,” she said. “The pessimistic part of me says this may force the Fed to raise interest rates more and they may go too far, and that may cause a deeper, more traumatic recession than anyone would like.”
Zach Stein, chief investment officer at an investment advisory firm called Carbon Collective, stated in an interview with TIME that while inflation will continue to decrease, the current effects will remain for a while but not for many years.
“Even with the likelihood that inflation has peaked, inflation will remain elevated for some time, as supply chain issues persist and there is still plenty of instability with the Ukraine war, which has caused significant swings in energy prices.”
He adds that with supply chains adapting to the times and the world adjusting to the conflict in Ukraine, global demand and prices will and have begun to slowly drop.
Preston Caldwell, the head of U.S. economics for Morningstar Research Services gives a similar message that inflation will ultimately decrease back down to more normal levels.
“High demand has conspired with supply constraints to cause price surges in many industries, hitting energy and autos especially hard. But once these supply constraints eventually resolve, we expect the various price spikes to unwind in a deflationary rush.”
While inflation will remain for a while, experts still advise American households to make necessary changes to help ease their financial burdens.
One expert, Madeline Maloon works as a financial advisor at California Financial Advisors. She said to CNBC that many American households should not spend on stuff that may not be essential to their daily lives as inflation remains.
“There’s often less flexibility to cut fixed expenses, meaning nonessentials are the budget area where households likely have to make cuts if they want to save money.”
She continues with a number of suggestions to save money. Families should go with cheaper lodgings on vacations, looking at what monthly subscriptions should be unsubscribed, and wondering whether they truly need expensive items like a new car or house if their current items work well enough.
While statistics and experts agree that inflation will continue through 2023, there are divisions on how much inflation will affect the economy and whether it will lead to a crash or a slow burn. We will have to wait and see.
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