News ID: 93389
Publish Date : 14 August 2021 - 21:57

LONDON (Bloomberg) - The supply constraints plaguing the U.S. recovery show few signs of dissipating any time soon, weighing on growth and stoking inflation. Forecasters lowered economic growth projections for this year and lifted inflation expectations into 2022 across a variety of metrics, according to Bloomberg’s latest monthly survey of economists.
Ongoing supply chain strains and labor market shortages are not only holding back economic growth but also raising costs for companies, said James Knightley, chief international economist at ING. “Demand outstripping supply not only means higher inflation, but missed growth opportunities.”
Compared to a year earlier, the personal consumption expenditures price index is now expected to rise 4% in the third quarter and 4.1% in the fourth, double the Federal Reserve’s 2% goal. Expectations for the core measure, which strips out the volatile food and energy components, were also revised higher.
Data out Wednesday showed inflation remained elevated in July. Though a moderation from the rapid pace seen a month earlier, the hefty price gains are eroding Americans’ buying power. Forecasters now expect the consumer price index to remain above 5% on a year-over-year basis at the end of the third quarter.
As prices of basic needs like food and rent continue to rise, Americans may begin curbing their discretionary purchases. A recent study by the Peterson Institute for International Economics found that workers in most U.S. industries are getting paid less than in December 2019, after adjusting for inflation.

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