Economic forecast: Inflation could hit 9% before easing as interest rates riseFebruary 17, 20221 min read
Don’t be surprised if inflation, which hit a 40-year high of 7.5% in January, spikes even higher over the next few months as the U.S. government’s massive response to the coronavirus pandemic continues to ripple through the economy.
Inflation will likely ease in the second half of the year, but a drop to pre-pandemic levels is not in sight yet, according to a pair of economists who shared their outlook for 2022 and beyond at a virtual conference hosted by the Fisher Center for Real Estate and Urban Economics at UC Berkeley’s Haas School of Business this week.
“We way overdid it” with monetary and economic stimulus, said Kenneth Rosen, chair of the Fisher Center and a Berkeley Haas professor emeritus. He gave Congress credit for crafting emergency programs—such as enhanced unemployment, stimulus payments and Paycheck Protection Program loans—in 2020, but “I do think the stimulus in 2021 probably was unnecessary and should have been more targeted.”
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Kenneth Rosen Chair, Fisher Center for Real Estate and Urban Economics | Professor Emeritus