For the 12 months ending in June, the government’s consumer price index rocketed 9.1%. It's the fastest year-over-year jump since 1981.
The United States has endured worse inflation before, but not in many decades. The post-World War II inflation peak reached nearly 20% in 1947, a result of the lifting of wartime price curbs, supply shortages and pent-up consumer demand. The inflation of the 1970s and early 1980s peaked at 14.8% in March 1980 before the Fed exorcized high prices with aggressive rate hikes that caused brutal back-to-back recessions in 1980 and 1981-1982.
The overall economy looks healthy for now, with a robust job market and extremely low unemployment. But many economists warn that the Fed’s steady credit tightening will likely cause a downturn.Good news — mostly. When the pandemic paralyzed the economy in the spring of 2020 and lockdowns kicked in, businesses closed or cut hours and consumers stayed home as a health precaution, employers slashed a breathtaking 22 million jobs.
With demand up and supplies down, costs jumped. And companies found that they could pass along those higher costs in the form of higher prices to consumers, many of whom had managed to pile up savings during the pandemic.
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