The inflation report for April brought no good news. The year-over-year inflation rate was 8.3%. The monthly “core” inflation, stripping away volatile food and energy prices, was 0.6%, which comes to 7.4% at a compounded annual rate.
Inflation, in short, continues running at near 40-year highs.
For the first time since the 1970s, we are at risk of entering a period of worldwide stagflation — meaning high inflation combined with low or negative growth.
Notably, the preliminary estimate of America’s GDP for the first quarter of 2022 showed an outright decline, though we should not read too much into preliminary data for just one quarter. We can expect a slowing US and world economy however as the Federal Reserve raises interest rates in order to reduce the inflation rate and as other disruptions hit the world economy.
