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Economists Forecast Higher Inflation for Several Years

Higher Inflation
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EDITOR NOTE: According to a recent WSJ survey of economists, the Fed’s “transitory” inflation may indeed be transitory but on a different timescale: “transitory” may signify years of higher inflation. We’re guessing that’s a conservative estimate. According to these economists, we’re looking forward to at least two years of inflation above 3%. Taking a step back, we also know that economists have a much poorer estimate of inflationary risks than business leaders who actually have to navigate the situation with “skin in the game,” as it affects their companies' bottom line. So, we can assume the worst: that inflation will either be much higher or much longer than expected. Are you prepared to undergo a potentially severe decline in your wealth in the coming years? Are you diversifying into safe-haven assets like non-CUSIP gold and silver to protect your financial future from a dollar plunge? Or are you willing to take chances with your hard-earned wealth should the economy take a turn for the worst?

Americans should brace themselves for several years of higher inflation than they’ve seen in decades, according to economists who expect the robust post-pandemic economic recovery to fuel brisk price increases for a while.

Economists surveyed this month by The Wall Street Journal raised their forecasts of how high inflation would go and for how long, compared with their previous expectations in April.

The respondents on average now expect a widely followed measure of inflation, which excludes volatile food and energy components, to be up 3.2% in the fourth quarter of 2021 from a year before. They forecast the annual rise to recede to slightly less than 2.3% a year in 2022 and 2023.

That would mean an average annual increase of 2.58% from 2021 through 2023, putting inflation at levels last seen in 1993.

“We’re in a transitional phase right now,” said Joel Naroff, chief economist at Naroff Economics LLC. “We are transitioning to a higher period of inflation and interest rates than we’ve had over the last 20 years.”

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