Inflation Spikes Due to Federal Spending – Alive Tampa Bay

TL/DR –

The commentary by Greg C. Truax discusses the impact of federal government spending, such as the American Rescue Plan, Inflation Reduction Act of 2022, and the Infrastructure Investment and Jobs Act of 2021, on persistent high inflation. The combined initiatives account for about $3.8 trillion, making the interest-bearing debt climb to around $35 trillion which has affected the labor market by artificially increasing the demand for labor, driving up wages, and consequently, service prices. Truax concludes by stating that excessive government spending complicates the Federal Reserve’s task of controlling inflation, as it increases demand when the Fed is trying to temper it.

Welcome to OnThePoint with Greg C. Truax

Struggling to understand the continuous high inflation? Look no further than federal government spending. A large chunk of this comes from the American Rescue Plan, the Inflation Reduction Act of 2022, and the Infrastructure Investment and Jobs Act of 2021. These initiatives cumulatively account for around $3.8 trillion.

This massive spending has resulted in increased budget deficits, pushing interest-bearing debt to approximately $35 trillion, as reported by Main Street Economics.

Such fiscal expansion has not only driven up employment rates by artificially increasing labor demand, but has also escalated service prices as a result of a tightened labor market and raised wages.

Excessive government spending has made controlling inflation more difficult for the Federal Reserve. It surges demand during a period when the Fed is endeavoring to moderate it.

About Greg C. Truax

Greg C. Truax is the president of GCTMediaGroup, a film production studio, online publisher, and radio commentator known for his written and broadcast opinion commentary.

—
Read More US Economic News