Inflation may remain elevated, says White House economic adviser

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At least one White House economic adviser sees inflation lasting longer than the Biden administration thought it would be creating headwinds for the U.S. economic recovery.

Jared Bernstein told FOX Business he sees inflation ending around 4% this year but settling back down to 2.3% in 2022. The catch: He cannot say when that will happen and believes we might see elevated inflation into the middle of next year. 

For Bernstein, the number-one issue causing prices to rise is the supply chain disruptions that have plagued businesses. He believes once that sorts itself out, inflation will subside. Bernstein adds the supply chain issues seem to be more troublesome than first thought and are taking longer than anticipated.

On Thursday, Bed Bath & Beyond said profits will take a hit due to inflation, the delta variant of the coronavirus and supply chain issues. 

COSTCO LIMITS PURCHASES ON 4 KEY ITEMS

TickerSecurityLastChangeChange %
BBBYBED BATH & BEYOND, INC.17.01-5.19-23.38%
COSTCOSTCO WHOLESALE CORP.450.25-1.54-0.34%

The retailer joined Costco, which also cited supply chain issues as a reason for limiting purchases on key products, including paper towels and Kirkland water. 

CFO Richard Galanti told analysts on a recent call the company has "chartered three ocean vessels for the next year," which will carry "several thousand containers." Costco could then redirect the ship away from backed-up ports in order to offload products while other competitors wait for inventory. 

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Federal Reserve Chairman Jay Powell has pointed to supply problems like this as raising the price of products we import but has stated policymakers see inflation as "transitory."

Treasury Secretary Janet Yellen testified before the Senate Banking Committee on Sept. 28 saying, "Clearly, inflation this year is going to be above 2%, just the experience so far this year makes that clearly true. But I think we are seeing monthly inflation rates taper off." She went on to say she sees inflation ending closer to 4% for 2021.

So as predictions from the administration rise, the drumbeat remains the same that inflation will settle back down eventually. 

No one has been able to answer when "eventually" will come.

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