Previously, we noted Washington Research Council economist Kriss Sjoblom’s advice that state budget writers “heed the pessimistic forecast.” He wrote yesterday,
At the ERFC’s February 16, meeting, Executive Director Stephen Lerch cited three primary negative risks: a Russian invasion of Ukraine, inflation and the emergence of a new covid variant. In the week since the meeting, Russia has invaded Ukraine, while the U.S. and other nations have imposed economic sanctions against Russia. These sanctions, particularly those related to oil and natural gas, are sure to exacerbate inflation. (emphasis added)
Inflation, as we know, is already a problem. Today, we get more news that we’re entering rarely encountered inflationary territory. CNBC reports,
A key inflation measure showed that prices rose at their fastest level in nearly 39 years, but it didn’t deter consumers from spending aggressively, the Commerce Department reported Friday.
The core personal consumption expenditures price index, the Federal Reserve’s primary inflation gauge, rose 5.2% from a year ago, slightly more than the 5.1% Dow Jones estimate. It was the highest level since April 1983.
Including food and energy prices, headline PCE was up 6.1%, the strongest gain since February 1982.
Here’s the link to the Commerce Department report.
The PCE price index for January increased 6.1 percent from one year ago, reflecting increases in both goods and services (table 11). Energy prices increased 25.9 percent while food prices increased 6.7 percent. Excluding food and energy, the PCE price index for January increased 5.2 percent from one year ago.
Heed the pessimistic forecast.
