The San Francisco Federal Reserve on Monday issued a study suggesting that government spending bills passed during the Biden administration are contributing to current inflation.
"Fiscal support measures designed to counteract the severity of the pandemic's economic effect may have contributed to this divergence by raising inflation about 3 percentage points by the end of 2021," economists Òscar Jordà, Celeste Liu, Fernanda Nechio, and Fabián Rivera-Reyes from the study concluded.
The economists go on to note that while inflation is high in much of the world, for the United States, consumer prices have increased more than in similar countries. The authors contribute both the Rescue Plan and the CARES Act to inflation.
"However, without these spending measures, the economy might have tipped into outright deflation and slower economic growth, the consequences of which would have been harder to manage," they note.
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