Outlook 2022
Inflation could rise 15% in 2022 if wage pressures spiral out of control; use gold to hedge - Saxo BankInflation remains one of the biggest threats to the U.S. economy. Analysts at Saxo Bank see the potential for consumer prices to rise 15% in 2022, overshadowing the last major inflationary environment seen in the 1970s.
The Danish bank's inflation forecast is part of its annual Outrageous Predictions, and while the forecast appears extreme, it is not as far-fetched as some would expect.
Last week the U.S. Consumer Price Index saw an annual rise of 6.8% in November; however, many economists note that inflation is a lot higher than the government's official reports.
John Williams' Shadow Government Statistics shows that inflation, based on a methodology that was employed prior to 1980, is already at 15%. Calculating inflation based on 1990 methodology, inflation is above 10%.
Christopher Dembik, head of Macro Analysis, at Saxo Bank, said that his prediction is based on wage inflation spiraling out of control, a similar scenario that happened in the 1970s.
"At the end of the 1960s, the U.S. Federal Reserve and the Fed chair then, McChesney Martin, misjudged how hot they could run the U.S. labour market without fanning inflation. The miscue paved the way for inflation expectations getting out of control and a massive wage-price spiral the following decade," Dembik said.
Dembik noted that inflation peaked at 11.5% in 1975, but it took a recession and the Federal Reserve raising interest rates to 20% in the early 1980s to get prices back under control.
"In 2022, the Federal Reserve and Fed chair Jerome Powell repeats the same mistake all over again as the post-Covid outbreak economy and especially the labour market are severely supply constrained, making a mockery of the Fed's traditional models. Powell believes millions of Americans will return to work and fill some of the 10.4 million open job positions as Covid-19 fades. But this is plain wrong," said Dembik......................
https://www.kitco.com/news/2021-12-15/Inflation-rising-could-rise-15-in-2022-if-wage-pressures-spiral-out-of-control-use-gold-to-hedge-Saxo-Bank.html
