‘Inflation Reduction Act’ Spending May Hinder Lowering Inflation
TL/DR –
Larry Fink, the CEO of BlackRock, has stated it will be difficult to reach 2% inflation, primarily due to the trillion dollars of fiscal stimulus in the CHIPS Act, the Infrastructure Act, and the IRA. He believes 2% is a difficult number due to restructured economic policy and poor immigration policies. He also pointed out that service inflation is a major culprit for high inflation, citing increased costs in insurance and long-term healthcare, and stating that central banks face difficulties in controlling this type of inflation.
BlackRock CEO Comments on Inflation and Fiscal Stimulus
During a recent interview on CNBC’s “Squawk on the Street”, BlackRock CEO Larry Fink shared his insights on inflation, stating it would be difficult to achieve 2% due to factors including the trillion dollars of fiscal stimulus from the CHIPS Act, the Infrastructure Act, and the IRA.
Responding to co-host Sara Eisen’s query about reaching a 2% inflation rate, Fink said, “No,” indicating the goal was hard to achieve. He reasoned that economic policies and immigration restrictions were having an inflationary impact, especially on jobs.
Fink’s Views on Service Inflation and the Spending Pattern
Fink further elaborated on the issue of service inflation, attributing it as the main factor driving high inflation rates. “We’re spending a lot more money on services,” he said. This includes increased expenditure on house maintenance due to aging housing stock, driving up insurance costs. Fink also touched on the impact of lifestyle changes on inflation, such as longer life spans leading to elevated long-term healthcare costs.
According to Fink, while product prices have remained stable over the past 30 years, the cost of services has spiked significantly. Using the cost of concert and sporting event tickets as examples, Fink pointed out that the willingness to pay for experiences has dramatically increased.
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