Economists, business groups cast shade on inflation trends
Wed, Mar 15, 2023 5:25 PM
By Tom Gantert, The Center Square
Not everyone was optimistic about the trend when the U.S. Bureau of Labor Statistics released its Consumer Price Index data this week showing inflation had dropped for the eighth consecutive month.
The Consumer Price Index showed inflation at 6% for the last 12 months ending in February, which was the smallest 12-month increase going back to September 2021, according to the BLS media release.
The National Federation of Independent Businesses said on the same day that fewer of its members polled in February were expecting better business conditions over the next six months.
And one national market expert said the Federal Reserve's rash of interest rate hikes is done with, so the CPI "most likely direction" is up.
Fewer small business owners polled by NFIB in February were expecting better business conditions over the next six months compared to January.
And 28% of small business owners polled by NFIB reported inflation as their single most important business problem.
"Small business owners remain doubtful that business conditions will get better in the coming months," National Federation of Independent Business Chief Economist Bill Dunkelberg said in a media release. "They continue to struggle with historic inflation and labor shortages that are holding back growth."
The Federal Reserve raised interest rates eight times from March 17, 2022 to Feb. 1, 2023.
"When inflation is too high, the Federal Reserve typically raises interest rates to slow the economy and bring inflation down." according to the Federal Reserve Bank of Cleveland.
"Since the Fed is basically done hiking, the most likely direction for CPI from here is up," tweeted Peter Schiff, a stockbroker and CEO and chief global strategist of Euro Pacific Capital, on May 14.
In January, Pew released a report on the stress the high inflation rates have imposed on state governments. That report found that annual state expenditures increased by about 18.3% in fiscal year 2022 compared to the previous year. That was the highest annual increase in at least 44 years, which the report based in part on inflation, according to the National Association of State Budget Officers.