Experts worry about rising inflation as Seattle gas climbs above $5 per gallon
Jun 8, 2022, 12:27 PM | Updated: 3:11 pm
With inflation affecting the rising costs of important commodities like food and gasoline, many Americans are left with higher and higher monthly bills on necessities for their daily lives.
As inflation gets up to 9.2% this month according to the Organization For Economic Cooperation and Development, essential goods take a bigger and bigger chunk of the average American’s budget. This along with recovering unemployment numbers has some worried about stagflation, or when economic productivity is below expected levels and inflation and unemployment keep increasing.
“The world economy is again in danger,” The World Bank warned, according to The Associated Press. “This time, it is facing high inflation and slow growth at the same time … It’s a phenomenon — stagflation — that the world has not seen since the 1970s.”
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Matthew Gardner, the Chief Economist for Windermere Real Estate and a member of the Washington State Governors Council of Economic Advisors, weighed in on the issue on Seattle’s Morning News Wednesday.
In reference to the rising gas prices, Gardner explained that the ongoing Russian Invasion, as well as the Organization of the Petroleum Exporting Countries (OPEC), produce less crude oil as they continue to try and meet pre-pandemic levels.
“Well, we know what’s going on in Ukraine, because OPEC, with all these things, coming in and is pushing up gas prices very, very significantly,” Gardner said.
With Seattle metro area gas prices above $5 a gallon for the first time, this price hike is making the above-average inflation especially difficult for commuters in the city.
Part of the reason for the rampant inflation is the continued supply chain issues that are affecting most industries, but especially food prices, which have increased more than 7% over last year. Another major factor according to Gardner is union participation, which has fallen dramatically since its peak after the Second World War.
“But what’s different today, or back then a lot of it was purely a function of union participation. One in three workers in America was a union worker. Today, it’s only at 10%. So you don’t have that collective bargaining ability or fewer people have it.”
While it is unlikely that this will cause a full-on recession though, Gardner says, and instead is expecting prices to return to normal as unemployment goes back down, that does not eliminate the possibility. Due to the history of the Federal Reserve handling similar situations, current issues don’t appear to go away without some major effects on the American economy.
“(The Federal Reserve) has a job that is to create full employment and stable inflation. However, every time they’ve tried to achieve that they’ve always overshot it and so soft landings, they’ve been pretty lousy achieving. So hopefully, they’ll do better this time around. There is still the potential for recession certainly though.”