The March Oregon Economic and Revenue Forecast has just been published, citing continued strong economic growth and warning of persistently high inflation. Josh Lehner writes,
The inflationary economic boom continues. The U.S. economy grew at its fastest pace last year since the early 1980s. This is true even after adjusting for the current bout of high inflation. More of the same is expected this year. Labor markets will grow and fully recover, however labor will remain tight for businesses looking to hire. Inflation will persist noticeably above the Federal Reserve’s two percent target, but the real economy will see strong gains due to business investment and consumer spending.
Today, households are flush with cash and rising wealth. Consumers have the ability and are showing the willingness to pay higher prices for goods and services. Business can pass along production cost increases as a result, maintaining or even increasing profit margins.
That’s the good news. He then addresses the supply-side challenges. The biggest threat, though, is now familiar.
A year ago, inflationary pressures could largely be tied to reopening the economy and semiconductor shortages. Since then the inflationary pressures have broadened.
As always, it’s an interesting analysis. While not directly applicable to Washington, the main themes strike us as applicable.
Certainly, Washington knows about inflation. Seattle CPI climbed 7.6% in December, among the largest increase among metros.