Carney On ‘Kudlow’: Resurgence Of Inflation Ahead

In a recent interview with Fox Business host Larry Kudlow, Breitbart Economics Editor John Carney asserted that the U.S. economy is on the brink of witnessing a resurgence of inflation that disrupts the commonly held narrative. Carney pointed to escalating oil and home prices as key indicators foretelling the imminent surge in inflation.

Carney explained that the relatively low oil prices were primarily a consequence of China’s economic slowdown. However, he predicted that China would soon inject substantial stimulus to bolster its economy, causing oil prices to rise.

Notably, home prices have shown a consistent uptrend for four consecutive months, and Carney emphasized that this trend would likely have a significant impact on the Consumer Price Index (CPI) in the near future, given that shelter contributes to approximately 40 percent of CPI.

He warned that the forthcoming return of inflation would contradict earlier predictions that it was declining. Carney went on to anticipate an impending rate hike announcement by Federal Reserve Chair Jerome Powell during the upcoming press conference following the Federal Open Market Committee meeting.

According to Carney, the Fed has signaled its intention to implement another rate increase, but he believes the central bank might have to take additional actions to address the escalating inflationary pressures.

He predicted that, contrary to market expectations, the Fed might need to execute another hike in the first quarter of the following year, surprising many and potentially causing significant disruptions across various sectors.

Carney highlighted an intriguing observation from Monday’s Breitbart Business Digest, where he linked the recent blockbuster success of movies like Barbie and Oppenheimer to the American consumer’s strong desire to spend money. This surge in consumer activity, in his view, would further contribute to inflationary pressures.

He humorously referred to the expected Fed rate hike as the “Barbenheimer Hike.” He further elaborated that the record-breaking box office figures reflected a consumer base that was enthusiastic about spending and not displaying signs of defensive savings, which are often associated with impending recessions.

Carney noted that people seemed eager to embrace a summer unburdened by pandemic restrictions and high fuel prices. While Carney remained cautious about the potential recession, he couldn’t ignore the signs of an inflationary resurrection on the horizon.

As the Fed contemplates its monetary policy, the economy is bracing for what may prove to be a critical period of economic uncertainty and adjustment.