America is still struggling to recover economically from the pandemic. Since December of last year, the Consumer Price Index (CPI) has increased by 7%, a larger yearly increase than what has been seen in 32 years. The CPI is a measure of the average change in prices paid by consumers for goods and services. The federal reserve predicts at least three more hikes in the next year alone, another unprecedented series of economic events. While the unemployment rate dropped rapidly to 4.2% of Americans, 6.9 million Americans are still unable to find work.
The Federal Open Market Committee (FOMC) cites increasing inflation rates as the reason for expediting the tapering of bond sales. The FOMC’s main purpose is to set and determine the use of monetary policy, the policy used by the U.S. Federal Reserve (Fed) to help sustain and promote economic growth. When economic growth becomes staggered, the Fed can buy securities from one of 12 Member banks, banks a part of the Federal Reserve System. The money from these securities can stimulate economic recovery. As the economy stabilizes, the Fed will decrease purchases of securities.
In November of 2021, federal officials revealed plans to scale back bond sales by around $15 billion per month.
“Inflation at a nearly 40-year high is not something the Federal Reserve can ignore,” says Danielle DiMartino Booth, Quill Intelligence CEO and a former adviser to previous Dallas Federal Reserve Bank President Richard Fisher. “While gas prices are starting to decline, there is still plenty of food inflation. There is risk now that inflation has become entrenched in households’ psyches, which further pressures policymakers at the Fed to be more aggressive in their tightening stance.”
During the pandemic, most categories of spending experienced price disinflation, and last summer, major supply chain chaos. Economists don’t expect lower costs of consumer goods any time soon; higher costs of transportation are being passed to the consumer. This may be hard for many to manage in an increasingly expensive economy and a world where public transportation is being used more than ever.
Rising rent costs are also expected to continue on an upwards trajectory. Rent rose for the third month in a row, in November, pointing to future inflation. Omicron is predicted to contribute to this.
High school age students all over the country are being affected by these changes.
“I shouldn’t have to put half my paycheck into gas,” says Lawrence Free State student Gus Cordova (‘23). “As prices fluctuate I’ll have to spend more money in necessities, which isn’t ideal for most people.” Cordova is working at the Lawrence Van Goh Center in Lawrence, Kansas. This is reminiscent of the 2008 recession, when many new drivers struggled to pay for gas.
“I am terrible at managing money,” they continued. “But inflation has affected me and my family in terms of housing, food, etc. It’s also affected us in terms of healthcare, and veterinary issues.”
Barstow students share similar opinions to those at public schools.
“I think [inflation] is inevitable in any economy, and can be a counter to deflation,” says Barstow student Charlie Hisle (‘23). “But I think that measures to counteract the crazy levels of inflation we are seeing in places like the UK are necessary.” And while many Barstow students are in higher income families than the average student, many are also still affected by rising costs and expenses.
