The White House, through the Office of Management and Budget, revised its inflation forecast for the rest of the year. It more than doubled projections for inflation at 4.8% compared to the 2% forecast last May.
RELATED: Inflation Goes Wild: Consumer Prices Up 5% In May
Inflation Forecast, Consumer Prices to Rise by 4.8% in the Fourth Quarter of 2021
Management and Budget officials said they expect consumer prices to rise by 4.8% by the last quarter of the year. This is a sharp boost from the earlier 2.1% projection they made in May.
However, officials foresee the same price pressures cooling off by next year. This will put the Consumer Price Index at 2.5% in 2022. They also see the CPI hitting 2.3% in 2023.
The updated inflation forecast remained consistent with other independent analyses. This includes projections from the US Federal Reserve.
They all reflect the administration’s belief that price pressures will fade over time. This is despite the fact that prices went higher than expected this year.
Trajectory Consistent With Inflation Forecast
A Budget and Management official went on a call with the media regarding the revised inflation forecast. “We believe this trajectory is very consistent with the inflation outlook that we have been discussing pretty much since we’ve been here,” he said. Recent data suggests that inflationary pressures already began easing up. However, they still remain elevated.
Meanwhile, consumer prices rose by 0.4% last month. This is 0.1% less than the 0.5% increase registered in July. This is according to the Federal Reserve’s preferred inflation indicator. In contrast, overall prices increased 4.2% a year ago.
Administration Also Boosted Economic Growth Estimates
The revised inflation forecast is part of the administration’s mid-session budget review. In addition, the White House also adjusted its annual economic growth estimates to 7.2%. Originally, the federal government foresaw a 5% growth rate last May.
Officials also see a lower deficit than expected for the fiscal year 2021. Instead of the original projection of $3.7 trillion, they now put the deficit at only $3.1 trillion, a savings of $555 billion.
As a result, the measure of the deficit as a share of the economy also fell. From a previous estimate of 16.7%, the share is now seen at around 13.9%.
However, the White House still sees deficits to exceed $1 trillion a year until 2030. Thankfully, the cumulative total will be lower by $684 billion.
‘No Way To Avoid Inflation’
Meanwhile, Brandon Arnold, Executive Vice President of the National Taxpayers Union says that right now, Americans have no way to avoid inflation. “It’s gasoline, it’s your energy costs to keep your lights on in your house, it’s the groceries that you’re buying, the back to school supplies,” said Arnold to The National Desk’s Jan Jeffcoat.
“The biggest issue that I’m watching right now of course is what happens in Washington. Are we going to embark on another massive tax and spend endeavor that will exacerbate inflation?”
Arnold suggested some measures to combat inflation. This includes “cutting the tariffs that were put into place over recent years.
We should not be paying additional amounts of money to buy sneakers for our kids, or backpacks for our kids, rulers, things like that,” he said.
“My biggest argument for the president here would be to try to do less $3.5 trillion in new spending, and higher taxes and borrowing, that’s going to make the problem worse.”
Infrastructure Plan Is Lavish Spending
Even as he admitted that the US will need to spend on infrastructure, Arnold wants less. He called the $3.5 trillion infrastructure bill “lavish spending” and wants none of it.
“There Are all sorts of wasteful spending in this bill, and our economy cannot afford it. Taxpayers cannot afford to shoulder this additional burden at this time, we’re still in a fragile economic recovery,” he added.
Watch Anthony Pompliano’s video discussing that the White House is now saying that we should expect high inflation:
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