In this four-part series, we examine areas that could create long-term impacts in the lives of people in the U.S. should the $1.2 trillion bipartisan infrastructure spending bill become law.

One of the ramifications of large-scale federal spending is the risk of higher prices for goods and services. As more money is injected into the economy, consumer demand increases and supplies are strained, creating upward pressure on prices. The Wall Street Journal reported on Aug. 11 that “Consumer prices rose 5.4 percent in July from a year earlier.”

Prices for hotels, restaurants, groceries, and gasoline all increased from the month of June. However, some of the jump could be attributed to recovery from the economic shutdown as consumers release pent up demand for goods and services.

The United States Bureau of Labor Statistic’s Consumer Price Index (CPI) found that costs rose 5.4 percent since last year. In July, the CPI rose 0.5 percent on a seasonally adjusted basis. And the index for all items, less food and energy, increased 0.3 percent in July; up 4.3 percent over the past year. As the economy recovers, businesses face worker shortages, placing inflationary pressure on wages. The Bureau reports: “Compensation costs for civilian workers increased 0.7 percent, seasonally adjusted, from March 2021 to June 2021. Over the year, total compensation rose 2.9 percent, wages and salaries rose 3.2 percent, and benefit costs rose 2.2 percent.”

As fear over the Delta variant of Covid-19 grows, The Washington Post reports prices will continue to rise. “For months, the Fed (Federal Reserve Board) and White House have said inflation will keep climbing as consumer demand surges while supply chains struggle to catch up. Their expectation is that as supply backlogs have time to clear, inflation will settle back down closer to the Fed’s 2 percent annual target,” the article reports.

The Council of State Governments continues to follow the latest updates on the infrastructure bill and has a full rundown of ways states can utilize potential funding and the impact that funding will have. To access our growing resources for state recovery, visit:

Recommended Posts