Jimu news reporter Song Qingying
Intern Cui Yufeng
The Washington Post pointed out that in addition to China, inflation rates in major economies around the world are soaring, and they are generally facing soaring prices, especially in the United States. In response to its highest inflation rate in 40 years, U.S. monetary policy is likely to pose a challenge to global finance. Tesla CEO Musk predicts that the world will usher in a great depression by 2023.
U.S. prices rise, source: CNN
Inflation in the United States is the highest in 40 years
According to the Washington Post reported on January 24, the US inflation rate reached 7%, the highest among the world's major economies, and Americans are battling the highest rate of deflation inflation in 40 years.
According to the U.S. Bureau of Labor Statistics, U.S. imported food, fuel and industrial parts prices have risen more than 10 percent over the past year, the biggest increase since 2007.
At the same time, large domestic companies are raising retail prices. Procter & Gamble said last week that freight costs rose $300 million and had raised prices across 10 product categories to boost profits.
As the demand for working from home increases, Americans' spending shifts from restaurants and movie theaters to laptops, clothes, and so on, and suppliers struggle to keep up with demand, so commodity prices are also pushed up. Over the past year, the price of durable goods has risen by 16.8 percent, more than four times the price increase for services such as restaurant dining, haircuts or medical treatment.
Some economists say inflation is also higher in the U.S. than elsewhere because of its economic structure and the amount of money invested in fighting the pandemic. Beginning in March 2020, the U.S. Congress approved a total of nearly $6 trillion in funding to boost the economy due to the economic downturn.
In response to inflation, on January 18, local time, the Federal Reserve Policy Development Committee said it expected interest rate hikes to begin in March.
Prices are soaring around the world, and China's inflation rate is lower than before the epidemic
Spanish Commercial Street, Source: The Washington Post
US media reports also said that since the epidemic, countries around the world are facing soaring prices.
Since the introduction of the euro, the rate of price increases in EU countries has increased significantly. Annual inflation in the UK reached 5.4% in December, the highest level in nearly 30 years.
Prices in Canada are rising twice as fast as they were before the pandemic.
In Japan, the central bank raised its assessment of inflation risk for the first time in eight years.
Among the world's major economies, only China's current inflation rate is lower than in early 2020.
Globally, the imbalance between supply and demand is pushing up prices as factories around the world recover at different rates after the pandemic. Research from the BlackRock Investment Institute shows that long-term trends such as rising protectionism and adjustment to a low-carbon economy will put upward pressure on prices in the coming years.
Global oil prices have risen more than 55 percent over the past year, nickel used in cars and aerospace plants has risen 27 percent, and the price of coffee has nearly doubled.
According to the International Monetary Fund, in sub-Saharan Africa, rising fuel costs mean higher fertilizer prices, which leads to higher food prices. With food accounting for 40 percent of consumer spending, inflation in the region jumped from 6 percent to 9 percent last year.
Musk predicts: The next economic crisis will be before 2023
In the face of the global economic situation in the next few years, Tesla CEO Musk raised concerns about the economic crisis. Earlier this year, he tweeted that with 936 unicorn companies around the world, it may be difficult to survive the economic crisis that follows.
Musk tweeted screenshots
After Musk published his predictions about the global depression, a large number of netizens immediately asked: "When will the next economic crisis be?" ”
Musk said: "Predicting macroeconomic developments is challenging, but I believe that in the spring and summer of 2022 or sometime before 2023, my predictions will come true." ”
Economists analyze that the biggest problem facing the global economy is the impact of energy shortages, geopolitics and other factors. Since last year, there has been a widespread energy crisis in Europe due to insufficient natural gas stocks and reserves.
Monetary policy is powerless against energy shortages. As central banks reduce asset purchases and begin to raise borrowing costs, the battle against inflation could exacerbate the hardships in financial markets.
Many economists said the Fed began expecting benchmark lending rate hikes in March. In light of the move, all three major U.S. stock indexes have been in the red so far this year, with the nasdaq index, dominated by technology stocks, down more than 10 percent.
The Fed's move to tighten monetary policy will also have an impact outside the United States.
Quoted in a january 17 speech by Chinese President Xi Jinping at the World Economic Forum, the Washington Post said: "If major economies put the brakes on monetary policy or turn around, there will be serious negative spillover effects that will pose a challenge to global economic and financial stability, while developing countries will bear the brunt of it." ”