NORFOLK, Va. (WAVY) — If it seems like prices are going up everywhere, you’d be pretty much correct. From the grocery store, to the gas station and beyond, you’re paying more for both the essentials and the things you just plain want.
U.S. inflation is the highest it’s been in decades, with the consumer price index hitting 6.2%.
“What we’re seeing right now is rapid increases in food, fuel, the prices of new and used cars, and in slower increases, but still increases, in manufactured goods, dishwashers, washing machines, etc.,” said Bob McNab, an economics professor at Old Dominion University.
He says we’re used to seeing inflation rates around 2%, so a rate about 6% is striking.
“We’ve had this large economic shock from the pandemic that’s going to ripple across time, it’s just going to be with us for a while,” said McNab. “The reality is we should prepare ourselves for another six months of this at least.”
McNab expects the Federal Reserve to step in.
“We should set ourselves up to expect that the Federal Reserve is going to increase interest rates because it can’t tolerate monthly inflation at a 6% annual rate,” he said.
He says that’s not ideal, but it’s better than letting inflation continue.
“Once inflationary expectations are baked into the economy, you have to really act aggressively with monetary policy to break those expectations,” said McNab.
His advice is to be patient.
“Unfortunately it’s not the Christmas present we all wanted, but if you compare this Christmas in terms of the economy to the previous Christmas, we’re in a better position,” said McNab. “More people aren’t unemployed, incomes are up, poverty is down. But on the other hand, inflation is looming over all of this and can unwind some of those gains made over the last year.”
McNab’s advice is for people to not make any rash financial decisions and be patient as the supply chain issues work themselves out. He expects things to get better by next summer.