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We’re on the verge of a catastrophic economic emergency, but the vast majority of our population doesn’t even know what’s about to unfold. This year, much of the optimism that fueled rallies in the financial markets was based on the expectation that the health crisis would soon be over. Well, that obviously hasn’t happened. In fact, the United States is facing one of the worst waves of newly confirmed virus cases ever. We all have witnessed what happened to the economy during the peak of the health crisis last year, and it seems like we’re headed to many other peaks in the coming months.
The impact of this new strain is going to be tragic and potentially fatal to millions of lives. To make it worse, our economic conditions are rapidly deteriorating, so we will have to face a twofold blow. This new wave is already weighing heavily on production all over the globe, with many manufacturing economies shutting down plants to contain the spread of the virus. As a result, the shortages and delivery delays we have been experiencing are only going to intensify from now on.
At the same time, our supply chain problems are about to be severely aggravated by another series of disruptions, and it will be even more challenging to move goods around the globe in a timely manner next year, so we can start bracing for even more empty shelves and price increases.
People are paying almost double to afford the same things they used to in 2019. And if you think your bills are high right now, just wait until next month. Retailers are announcing that a fresh wave of supermarket price hikes will begin on January 1st, with several companies raising prices anywhere from 2% to 20% on a wide range of staples including pasta, condiments, soups, cookies, produce, dairy products, and meats.
According to the Wall Street Journal, some food producers will be implementing much larger price increases, such as Kraft Heinz, announcing a dramatic 20 percent increase in some of their most popular items. The price of the company’s Grey Poupon mustard, for example, will go up by 13%. Other food manufacturers including Campbell Soup and General Mills, maker of Cheerios, have also warned that they will be raising prices on their goods in January. On the same note, a major regional wholesale supplier leaked to CNN a notice that General Mills sent retailers to inform them that the price of some products is about to go up as much as 20% starting in mid-January.
All of these acute increases are certainly concerning. Many economists are getting extremely alarmed about the near-term outlook. “Inflation is outpacing increases in household income and weighing heavily on consumer confidence, which is at a decade low. It is only a matter of time before it impacts consumer spending in a material way,” explained Greg McBride, Bankrate’s chief financial analyst.
In addition to extreme weather, supply chain problems, and a shortage of workers, retailers noted that some of the other factors contributing to the jump in food prices are higher oil prices and companies passing on the cost of more expensive transportation. Unfortunately, this is just the beginning, and even Goldman Sachs is now warning that “the inflation overshoot will likely get worse”. Economic optimists continue to believe that policymakers at the Federal Reserve will come up with a plan to solve the crisis they created. But the Fed only has two “solutions” to any crisis.
They can either suppress interest rates even further — but they have already been pushed all the way to the floor and that doesn’t seem to be working anymore, — or, they can print and pump more money into the system, as they’ve been doing for years. Both possibilities will only make the problem worse. In fact, these exact policies created the raging inflation nightmare we’re currently in, and now they don’t even know how to put the fire out. As inflation spins out of control, millions upon millions of Americans will start to see their purchasing power collapse to the lowest level in decades.
Sadly, the Federal Reserve will continue to make the same mistakes, and the insane inflation surge we’re witnessing right now is nothing more than an alarm bell for the depression we might be facing in 2022. Don’t be mistaken — we’re already on the edge of a recession right now. If you thought that the outlook for 2022 was gloomy before this new virus wave, now things have gotten downright horrifying.
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