Pandemic Helped Create Recipe for Inflation

Consumers are facing higher prices on most goods and services.

Americans’ checkbooks are on fire.

Which, for the most part, has caused residents to face much higher prices on most goods and services.

According to Dr. Christopher Douglas, when the economy starts to pick back up after a downturn like after a global pandemic, prices tend to go up. People are more willing to spend when they have more money thanks to government-infused stimulus payments.

On the other hand, corporations raise prices when people are buying more.

“We have the perfect recipe for inflation,” said Douglas, an associate professor and chair of the Department of Economics at the University of Michigan-Flint, where he teaches principles of microeconomics, principles of macroeconomics, international economics, public finance and sports economics.

“We’ve rapidly expanded the money supply,” he explained. “People have been getting stimulus money from the government and are anxious to get out and spend it. I read where some people were stockpiling frozen food. And the next thing we had was a shortage of freezers and refrigerators.”

Douglas said that prices are starting to come down but are still higher than when the pandemic started.

With consumer prices last month rising at the fastest rate in nearly 13 years, some policymakers are worried that the hyperinflation of the 1970s is around the corner.

“How long does this go on? I simply don’t know,” Douglas said.

But many, if not all, experts say those increases are likely to be temporary, reflecting the economy’s rapid reopening as the pandemic wanes rather than long-term supply issues.

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