The White House More Than Doubles Its Inflation Forecast
August 27, 2021
As Covid-related supply disruptions continue to persist, The White House’s Office of Management and Budget (OMB) raised its forecast for annual inflation in new projections, more than doubling their previous estimation.
The OMB expects consumer prices to rise 4.8% in the fourth quarter as compared to a year earlier. That is up sharply from the 2% rise that the office had previously projected in May. While the projection is higher than previously expected, officials see inflation quickly subsiding, falling to 2.5% in the fourth quarter of 2022 (up from May’s projection of 2.1%), then falling further to 2.3% in 2023.
The projections are largely in line with other projections, like those of the Federal Reserve, which asserts that the inflation currently being seen is transitory in nature and will fade as supply chains work themselves out after the pandemic. Recent economic data suggests that price pressure may already be easing. Consumer prices were up 0.4% last month, down from the previous month’s 0.5% climb, according to the Fed’s preferred inflation gauge.
The OMB also raised its economic growth projection for the year from 5% to 7.2%, attributing the more optimistic estimate to the faster than expected economic recovery seen over the summer, as more Americans are getting vaccinated and resuming normal economic activity.