An economics professor warned on Wednesday that the skyrocketing costs for food and gas that Americans have experienced during the Biden administration would likely continue with no end in sight.
The warning from Brian Brenberg, executive vice president; associate professor of Business and Economics at The King’s College, comes as the Federal Reserve raised interest rates by a half-percentage point on Wednesday afternoon, the largest increase in more than two decades.
“Food prices are at record highs: Corn, soybeans, wheat, other key input products still at record highs. Fuel still hanging at a very high level. Those two things are going to drive inflation here,” Brenberg said. “I don’t see a big end in sight for that.”
“Inflation’s a bad problem, recession is a bad problem as well,” Brenberg continued. “This administration and the Fed backed themselves into a corner where we’re facing one or the other right now.”
Brenberg noted that a slowing down of the U.S. economy would result in less money in people’s pockets, which will lead to businesses not investing as much and not hiring as much, “which means now you’re talking about a jobs problem.”
“The inflation started to kick in in a big way last April. So now you’ve got inflation on top of inflation. Even if that rate comes down a little bit, it’s built on previous inflation, which means people are still feeling massive price hikes,” he added. “Whether you’re talking about food, whether you’re talking about fuel, we’re talking about housing, whatever the area, people are getting nailed by this, and they feel it intensely,” he said. “It’s not just that it’s a little bit of a problem for them, they’re saying, ‘This is a serious problem for me.'”
The Fed’s increase of interest rates is intended to combat the inflation that Americans are experiencing under Democrat President Joe Biden’s presidency.
After starting to raise interest rates earlier this spring, the Fed’s latest move “will accelerate the impact on American wallets from gradual to more sudden,” The Wall Street Journal reported.
The move will push mortgage rates higher and likely increase the annual percentage rate on credit cards. However, the report added that the rate hike “could mean good things for savers long saddled with minuscule rates of return on savings accounts and certificates of deposit.”