Inflation rose again in May in the United States and reached 8.6% over one year, a new 40-year high. This is much more than expected by analysts and the impact could go beyond American consumers alone. The situation should also convince the US Central Bank (Fed) to tighten its key rates further next week.
In detail, energy rose 34%, food prices rose 10% to United States. Accommodation, plane tickets, cars and even medical care have also seen their prices rise significantly.
” The American consumer is a bit like the locomotive of the American economy, whose consumption represents 70% of the GDP in the United States, explains Benoit Peloille, strategist in the management company Vega, joined by Pauline Gléize of the economy department. The American economy is the locomotive of the world economy. »
According to the analyst, the morale of American consumers is not looking good, we are even “in line with the levels of entry into recession”: in a cycle where households are curbing their consumption.
The impact on global growth
“ The savings rate has returned to levels that have been the lowest for more than a decade, and households are relying heavily on credit, which in reality is quite worrying because households that do not have enough savings are using credit to make ends meet in the face of this inflation, and therefore the risk is an accelerated slowdown, more brutal than expected, of the American economy under the effect of a tightening of the Federal Reserve which is ultimately rather important. »
This will weigh on growth and on theMondial economy. ” This has an impact in particular on emerging countries. Emerging countries faced with this monetary tightening risk being victims of capital outflows, so there is a potentially quite significant destabilizing effect due to this monetary tightening in the United States “, specifies Benoit Péloille.
The tightening of monetary policy
And the American Central Bank has already started a monetary tightening which seems to be taking place at a pace which will be quite sustained but it will take a little time for it to “ is starting to have an impact on this inflation “, considers Benoit Péloille, especially since he started late.
Another element to take into account to explain this inflation: the prices of raw materials, agricultural materials which are elements which are representative of a supply shock. But central banks, through monetary tightening, have an impact on demand, through the distribution of credit, but not a direct impact on supply. And so they have no direct effect on inflation.
” But you have to bear in mind that no matter how much you tighten monetary policy, it is only when you have had a negative impact on growth that inflation will then be able to moderate. If we are faced with inflation which has a particularly bad impact on growth, at the same time we will slow down growth in order to hope to calm this inflation, and therefore in reality this scenario, which has now become somewhat consensual of stagflation, for us it is rather the intermediate step before unfortunately the risk of recession in reality. »
Job creation on the rise, tempers Joe Biden
Faced with the inflation figures, the American president Joe Biden traveling to Los Angeles preferred to bet on the good numbers of job creations or growth since taking office: ” Thanks to these advances, Americans can tackle inflation from a position of strength like no other country in the world. Because all countries in the world suffer from high inflation, and much more than us for the vast majority of countries in the world. But make no mistake. I understand that inflation is a real challenge for American families. Today’s inflation figures confirm what America already knows. »
The American president took the opportunity to clarify that Putin’s price hike was hitting America hard. Prices at the pump, energy and food prices account for half of the increase since May. ” Inflation outside of energy and food, what economists call core inflation, has slowed for two months. Not enough, but she slowed down. And we need it to slow down much faster. »
►To read: Inflation in the United States: Joe Biden receives the boss of the FED and his Minister of the Economy