Americans have been dealing with inflation and rising prices for some time now. You may think that would dissuade us from spending or at least being more conservative with our money, but metrics say the opposite. The former Toys ‘R’ Us CEO also commented on the matter, saying consumer demand is “still building” despite rising inflation.
Storch Advisors CEO and former Toys ‘R’ Us CEO Gerald Storch talked to Fox News yesterday, stating he thinks the trend will continue. According to him, consumers continue to spend and retailers are “buying like it’s never going to end.” Economic reports say U.S. consumers increased spending last month as COVID and Omicron cases began decreasing worldwide. Surprisingly, this is after the country’s inflation is the highest it’s been in four decades.
However, this isn’t necessarily a good thing. Storch warns “at some point, this thing comes down to Earth and when it does, the only way it ends is badly.” Why is that the case? Storch believes the government is going to try to combat inflation which could hurt consumers. “So they are going to start tightening, raising rates, buying back bonds; the question is, can they get it right?” he commented.
The Federal Reserve did say last month it could “soon” raise interest rates for the first time in three years. Americans will have to spend more money on things like gas and money, meaning in about six months, Storch says our new spending habits won’t be an option anymore.
“When I say ‘end badly’ eventually, as you tighten, tighten, tighten to bring inflation down – the whole purpose is to decrease this consumption, this excess liquidity – and as you do that, these numbers have to come down,” he concluded.
United States Import Prices are Increasing Because of Supply Chain Issues
With inflation being the worst it’s been in 40 years, one would hope the trend won’t continue. However, that doesn’t seem to be the case. With import prices jumping last month, rising inflation may be the norm for some time.
CNBC reports U.S. import prices increased the most they have in a decade last month. This comes from energy products costing more and supply chain issues, suggesting high inflation won’t be a thing of the past anytime soon. Specifically, import prices increased by 2 percent last month, the largest since April 2011.
Unfortunately, this contrasts with earlier reports last year suggesting import prices and inflation would actually lower. Omicron is largely to blame, causing fuel prices to rise 9.3 percent last month despite an 8.3 percent decrease in December 2021. Similarly, food items saw a modest increase of 3.6 percent. Excluding those two categories, import prices rose a total of 1.1 percent.
With Omicron and COVID cases decreasing globally, hopefully, that leads to lower import prices.
