Inflation is up, GDP is down, and there’s increasing speculation that a recession could be brewing. That’s a lot to be concerned about, but how concerned should we be? We asked ASU economist Dennis Hoffman.
How much is inflation affecting our economy?
“It manifests itself in a number of different ways…I mean try mortgage rates…we’ve got expensive groceries, we’ve got expensive everything and that’s hitting especially low-income people really, really hard. But now, we’ve got ‘stag-flation’,” Hoffman said.
Well, what is stagflation?
“This was the evil word of the ’70’s, this is when you have slow or no growth…’stagnation… accompanied by inflation.”
This year, consumption and investment were really strong according to Hoffman but “we got killed by net-exports and so it usually is a pretty small piece of the puzzle but this time it turned out to be big, we continued to import a lot but our exports fell off the table.”
This was due in part because of the inability to export to Asia because they were locked down, we couldn’t export to Europe because of the Russian deal and our imports continued said Hoffman.
Phoenix has seen a 10.9 % inflation rate from a recent report, which is the highest of any metropolitan area in the country.
“CPI is dominated by the cost of shelter. [In Phoenix] we have the highest housing price inflation in the nation. Housing prices went up faster in Phoenix than anywhere else, that translated immediately into higher rents, higher housing prices, that goes into shelter and that hits us,” Hoffman said.
He added that we kept our economy open more than other places did.