Investing and Global Finance News

America’s Inflation Anxieties

What are the current anxieties that are impacting America right now, vis-à-vis inflation? Apparently, not what one might initially think. Even though gas prices are fast expanding and have now reached nearly $4-a-gallon, it seems that America’s biggest worry is homeownership which is increasing lease prices for its 38 million renters. One way of dealing with this has come from Federal Reserve. Ben S. Bernanke, the company’s chair, has promised to keep interest rates “at record lows for an extended period,” since any “threat of accelerating prices likely will be transitory.” But apparently this view isn’t shared by everyone. UBS Securities LLC chief economist Maury Harris said that they should have been looking at rents too. Others agree that there needs to be an analysis of all equities combined.

What Investors Expect

So what are investors expecting? Rising prices. These have dropped from 2.66 percent mid-April to the current number of 2.28 percent. Inflation could have quite a strong negative impact on “the longer-term portion of a bond portfolio.” Rents have account for around 1 percentage point of the last 10 years 2.4 percentage point peak in prices which might revert in the not-so-distant future. The tougher things are for renting an apartment, the greater the figure will be vis-à-vis overall inflation.

Other Price Increases

Of course, other price increases have also added to the mix. Based on the Consumer Price Index, from the beginning of 2011, there has been a growth of 2.1 percent on food and energy. Given this, there is the criticism that policymakers thus are not getting to grips with the real issues affecting inflation. As well, when it comes to homeownership, the “subprime-mortgage crisis” has clearly had an impact. This led to plummeting house prices since 2006 of 33 percent. So as with any economic analysis, it’s just not so completely clear-cut. There are many issues impacting inflationary problems in America, and it’s all too easy to jump to conclusions and make a blanket statement. Each issue has to be taken on its own merit and analyzed carefully to reach a true picture.

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