US Economy: The Future of Inflation

What will it hold for the future?

Micah Shin - Senior Writer, USA

6.00am, December 9, 2021

The Federal Reserve predicts that inflation will settle down mid-2022 as more people return to work and supply shortages subside.

In addition, an increase in consumer demand has not been met because of lagging productivity. At the moment, high inflation continues to be a normality due to the largest labor and supply shortages in decades. It is important to note that because these effects are a product of the pandemic, a temporary event, the current trend is not foreseeable. What are key steps that are being taken to offset inflation? For one, increasing vaccination rates have helped rebalance spending patterns. In this manner, demand for goods will decrease. Despite the negative connotation surrounding the word “inflation,” this phenomenon can actually be good for the average American citizen.

For example, inflation favors someone who has a fixed-rate debt. As inflation increases, so do wages. With fixed-rate debts like mortgages, monthly payments will stay constant while the value of the home increases over time.

In other news, ecommerce giant Amazon is expected to overtake UPS and FedEx, becoming the largest delivery service in the United States. To increase efficiency, Amazon plans to have 30 fulfillment-and-delivery centres by the end of this year. The pandemic has catalyzed profits for the company. In fact, Amazon has hired over 600,000 employees, doubled its shipping container capacity, and purchased nearly 90 aircrafts for delivery since the coronavirus outbreak. These accommodate the influx in sales and aid in accelerating the shipping process. During this year’s cyber Monday, customers spent $10.7 billion, a 1.4% decrease from previous years. Although 1.4% seems minute, this is the first time that slowdown in shopping has been tracked on a major shopping day. What does this mean for online shopping during the holiday season? Contrary to this slowdown, record-breaking ecommerce activity is expected during the month of December. Digital sales are anticipated to reach over $200 billion dollars from November 1 to the end of 2021-a remarkable gain of 10%.