High inflation will continue well into 2022, owing to supply chain pressures, according to a survey of economists by The Wall Street Journal (subscription). The survey included the NAM’s own Chief Economist Chad Moutray.
What they’re saying: “Economists on average see inflation at 5.25% in December, just slightly less than the rate that has prevailed since June. Assuming a similar level in October and November, that would mark the longest inflation has been above 5% since early 1991.”
- Respondents predicted that consumer-price inflation will decrease to 3.4% by June 2022, then to 2.6% by the end of that year, but that is still above the average seen in the decade before the pandemic.
Why it’s happening: About half of those surveyed said supply chain constraints, predicted to remain through most of 2022, were the biggest hurdle to economic growth in the next 12 to 18 months.
- Just 8.2% of economists surveyed cited the pandemic as the foremost threat to growth.
The impact: “Elevated inflation for several years could ripple through the economy in various ways. Consumers could find their household budgets squeezed. Increased borrowing costs could weigh on stock values and stymie interest-sensitive industries like housing.”
The NAM says: “It is clear that the supply chain challenges, worker shortages and cost increases have been more pervasive than we might have predicted a few months ago, and they will persist into the new year,” said Moutray. “The result has been a downgrading of the forecast for third quarter real GDP growth, even as we see continued economic growth moving forward.”