Peter Schiff, chief economist and global strategist at Euro Pacific Capital believes inflation has not yet cooled down and that the American economy will either have to face recession or learn to live with the current trend of high prices.
What Happened: "A lot more price hikes are coming as there’s still a lot of inflation left in the pipeline. Plus, rising budget and trade deficits, together with a weakening economy means the Fed will soon go from pretending to fight inflation to creating even more," Schiff tweeted.
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Economic data releases this month have not been indicating a rosy picture as far as inflation is concerned. First the consumer price index report showed inflation did not moderate as much as expected.
The retail sales data later indicated the economy is still running hot while labor market data continues to remain strong. The producers price index, too, came in higher than expected at 0.7%.
Federal Reserve officials are now sounding increasingly hawkish. Two Federal Reserve officials reportedly said on Thursday the central bank should have lifted interest rates more than it did in early February, and cautioned additional hikes in borrowing costs are essential to bring down inflation to desired levels.
Schiff added in his tweet, "Here’s the choice. 1) The Fed allows interest rates to go much higher, causing stocks to plunge, a severe recession, and forcing large cuts to government spending, including to Social Security & Medicare. 2) The Fed and Americans accept very high inflation as the new normal."
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