Deutsche Bank published a report Monday noting that the United States is facing “the very real specter of consumer-driven inflation.” The bank’s chief economist David Folkerts-Landau and others notably highlight the Federal Reserve’s monetary easing policy and recent tolerance toward higher inflation.
Deutsche Report: ‘Transitory Inflation Could Feed Into ’70s Style Stagflation’
The price of commodities in the U.S. has surged according to a number of recently published studies over the last two months. Currently, commodity-price increases are moving in lockstep as products like oil tapped a two-year high, the price of lumber jumped 377% in a year’s time, electronics are 10% more expensive across the board, copper has risen to record highs, soybeans and corn prices have skyrocketed, and retail beef and pork is eliciting “sticker shock.”
On June 7, Germany’s lending giant Deutsche Bank published a report with a dire warning to the U.S. concerning inflation. The study features Deutsche’s chief economist, David Folkerts-Landau, the company’s head of economic research, Peter Hooper, and thematic researcher Jim Reid. The analysts believe rising inflation could be a ticking “time bomb” and the U.S. central bank may feel consequences for delaying actions.
“The consequence of delay will be greater disruption of economic and financial activity than would otherwise be the case when the Fed does finally act,” Folkerts-Landau wrote in the report. “In turn, this could create a significant recession and set off a chain of financial distress around the world, particularly in emerging markets,” the Deutsche economist added. However, the inflation may start a little later than most think, as economies are more fluid than they were last year being locked down.
“Consumers will surely spend at least some of their savings as economies reopen,” Folkerts-Landau detailed in the report.