Fed Chairman Jerome Powell | Twitter.com/federalreserve
Fed Chairman Jerome Powell | Twitter.com/federalreserve
Perhaps no American city has been impacted by the economic effects of the COVID-19 pandemic the way Atlanta has, as the federal government has taken drastic measures to try and stabilize entire business sectors.
The byproduct has been inflation, which saw a dramatic increase in June that had not occurred since before the 2008 market crash, with the year-over-year price increase at 5.4%. The Bureau of Labor Statistics reported that of the 23 largest metros in the country, Atlanta has had the greatest increase in consumer prices, with all items climbing to a total of 6.7%.
Leading the way were food and beverage prices, which increased by 1.7%, housing by 4.1%, clothing apparel by 11.2%, transportation by 23.9% and energy by 27.5%. Among the biggest industries that have been affected by inflation are the transportation industry, with an increase of 21.5%, along with energy consumption seeing extreme price increases at 24.5%.
Contributing components include increased demand, near-zero interest rates from the Feds and unprecedented federal government spending. On top of all that, Congress passed three enormous spending packages in response to the COVID-19 crisis: the $2.2 trillion CARES Act (March 2020), the $900 billion Coronavirus Response and Relief Supplemental Appropriations Act (December 2020) and the $1.9 trillion American Rescue Plan (March 2021).
President Joe Biden's Federal Reserve Chairman Jerome Powell was reserved when he assessed that the risk of inflation "could turn out to be higher and more persistent than we expected" following the Fed’s decision to keep the interest rate unaffected.
Mark Vitner, a senior economist for Well’s Fargo’s Corporate and Investment Bank, did offer a silver lining by stating that the current inflation trends won’t come close to historic periods of inflation.
“Most of the run up in inflation that we are seeing is due to some temporary supply shortages and bottlenecks in the supply process because one or two key parts are missing, such as semi-conductor chips,” Vitner said.
The Atlanta area is expected to see prices continue to climb over the following months.
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