How Big a Threat to the U.S. Economy Is the War in Ukraine?
New YorkerOct 19, 2021
US Inflation Predicted to Reach Double Digits Amid Invasion of Ukraine
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Image copyright: Reuter [via Business Insider]
The Facts
Economist Mohamed El-Erian predicts that US inflation will hit double digits this summer due to the ripple effects of the invasion of Ukraine.
This prediction follows February's US Consumer Price Index showing inflation at a 40-year high of 7.9%.
The Spin
Pro-establishment narrative
The war in Ukraine has brought a lot of economic uncertainty and the Fed is having to carefully walk that tightrope: raising rates too quickly is dangerous and can lead to a recession, but leaning too far on the other side of the spectrum can be just as disastrous. The Fed is right to proceed with caution.
Establishment-critical narrative
The inflation surge began long before the invasion of Ukraine, but the Fed was quick to dismiss it as temporary. We are now seeing the result of their nonchalant approach and it's no surprise that Putin is being used as a scapegoat.
