Inflation in the United States is reaching record levels — and Americans are starting to notice.
In essence, inflation is the erosion of a currency’s purchasing power over time. If, for example, inflation remains at 2% for a year, then the value of each dollar — whether new earnings or previous savings — drops in value by 2% over that same period.
While the Federal Reserve has pegged its long-term inflation target at 2%, the United States economy has witnessed inflation rates well above the official benchmark since March 2021. For three of the past four months, inflation has remained at roughly 5.4%.
Higher-than-usual inflation has played a role in fading consumer optimism, leading some analysts to worry about a looming recession. Likewise, America’s business leaders — regardless of their politics — are sounding the alarm over rising price levels.
Jamie Dimon — JPMorgan Chase
Jamie Dimon — the longtime chief executive of JPMorgan Chase — indicated that high inflation will likely extend beyond the near term.
Beyond his leadership of the investment banking world, Dimon is the Chairman of The Business Roundtable and formerly served as a board member of the Federal Reserve Bank of New York. He told CNBC that JPMorgan Chase — the nation’s largest bank by assets — foresees a sustained rise in price levels.
“[Our bank has] a lot of cash and capability and we’re going to be very patient, because I think you have a very good chance inflation will be more than transitory,” he said.
“If you look at our balance sheet, we have $500 billion in cash, we’ve actually been effectively stockpiling more and more cash waiting for opportunities to invest at higher rates. I do expect to see higher rates and more inflation, and we’re prepared for that.”
Bill Ackman — Pershing Square Capital
Bill Ackman — the founder and leader of Pershing Square Capital Management — said that the Federal Reserve “should taper immediately and begin raising rates as soon as possible.”
With a $3.3 billion net worth, Ackman is known for deals involving firms like Wendy’s International, Tim Hortons, and Target Corporation. Ackman told the Federal Reserve Bank of New York that inflationary pressures pose a risk to economic stability.
“We are continuing to dance while the music is playing, and it is time to turn down the music and settle down,” Ackman explained, adding that his firm put money “where our mouth is in hedging our exposure to an upward move in rates, as we believe that a rise in rates could negatively impact our long-only equity portfolio.”
A recent Pershing Square presentation to central bankers notes that the economy has made encouraging progress in the months since COVID-19 — largely because of $5.1 trillion in government stimulus spending. In addition to an inflation rate far above normal levels, there are 2.8 million more available jobs than workers willing to take them.
“A ‘wait and see’ approach to raising interest rates creates significant risks given the substantial progress to date on employment and inflation combined with the unprecedented economic backdrop,” the report argues.
Carl Icahn — Icahn Enterprises
Carl Icahn — the founder of Icahn Enterprises and a longtime rival of Ackman — likewise warned that the United States economy will experience a crisis due to rising inflation.
Icahn, who has a net worth of $22 billion and worked as Special Advisor to the President on Regulatory Reform during the Trump administration, warned of an economic fallout associated with rising prices.
“In the long run we are certainly going to hit the wall,” Icahn said in an interview with CNBC. “I really think there will be a crisis the way we are going, the way we are printing money, the way we are going into inflation. If you look around you, you see inflation all around you and I don’t know how you deal with that in the long term.”
Icahn, however, was hesitant to officially lay out a timeline for any inflation-driven crisis.
Marc Rowan — Apollo Global Management
Marc Rowan — the CEO of Apollo Global Management — noted that rising price levels are affecting every portion of his portfolio.
Rowan’s company has assets under management of $472 billion and recently executed a deal to buy Yahoo and AOL from Verizon. A major risk to the company, however, is inflation.
“There’s not a place [where we are not seeing inflation]. Everything that we once did now costs more,” Rowan said to CNBC’s Leslie Picker. “Lead times, pressure on inventory, pressure on supplies, pressure on employment. Our experience in our portfolio is really no different than the broader economy.”
The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.