Harvard Economist Warns Inflation Is Here for Two More Years

Maxx-Studio/shutterstock.com
Maxx-Studio/shutterstock.com

Who are you going to trust regarding the future of our economy? Are you going to believe desperate Democrats who seem to be making empty promises about recovery? Or will you believe a Harvard University economist?

Kenneth Rogoff, a Harvard economist, and chess Grandmaster, recently warned that high inflation will remain in our country through 2023. 

This warning comes as the Bureau of Labor Statistics gave a report that in December consumer prices rose by 7% over the previous year. This is the highest rate in approximately 40 years. Along these lines, real average hourly earnings decreased by 2.4% from December 2020 to December 2021. This statistic considers the effect of inflation, and it cuts into the purchasing power of US consumers. 

Kenneth Rogoff, in an interview with Fox Business, explained the difficulty in raising interest rates to fight inflation when public and private data is high. It also makes it difficult when both the stock market and housing prices are high, and the economy is still weak. He said for central bankers to be willing to raise interest rates, they will have to have strong stomachs. 

The Harvard economist also noted that policymakers at the Federal Reserve need to balance the need to cut inflation while staying away from recession. He believes that the question they face is how much they are going to have to hit the brakes to really slow inflation down. Rogoff thinks that the Federal Reserve will be conservative in its attempts at increasing the rates. He explains that they have not used rate hikes to fight high inflation for decades, so it is not clear exactly how it is going to work out in the future. 

One thing that is clear is that voters are not pleased with President Joe Biden’s handling of the economy. Inflation has risen from 1.4% to 7% since Biden entered the White House. 

A new CBS News poll revealed that half of the voters in America are frustrated with Biden’s presidency. Almost 50% described themselves as “disappointed” with him; 40% said they were “nervous.” And only 25% of voters described themselves as either “calm” or “satisfied.”

As is usually the case, voters are focused on their pocketbooks. A total of 58% said that the Biden administration was not focused enough on the economy; 65% said that the White House administration was not sufficiently focused on the issue of inflation. 

Desperation seems to be rising as some progressive economists are now trying to convince policymakers to focus on fixing price levels. The treasury secretary under former President Bill Clinton, Larry Summers, warned last week that the United States is moving toward “higher entrenched inflation.” Summers, who also was the director of the National Economic Council under former President Barack Obama, said, “I think the data flow is saying what I’ve thought for quite some time that, yes, there are transitory elements in inflation, and very likely they will recede, but we are basically moving towards higher entrenched inflation. It’s there in expectations, it’s there in wages, it’s there in labor shortages, it’s there in the pervasive pattern across many different prices.”

Summers also said that people to excuse these results by picking one figure and another figure from month to month. But he said that we have an overheated economy and it is a challenge for the Federal government to cool it off in a controlled way. 

That has not been done very successfully in the past. So it’s going to be a very challenging year for macroeconomic policy,” Summers said.