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 negative ramifications of large-scale federal spending is the risk of higher prices for goods and services. As more money is infused in the economy, consumer demand increases and supplies are strained, creating upward pressure on prices. The Wall Street Journal reported 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), a measure of average change over time in the prices paid by consumers for a designated market basket of consumer goods and services, found costs rose 5.4% since last year. In July, the CPI rose 0.5% on a seasonally adjusted basis. And the index for all items, less food and energy, increased 0.3% in July; up 4.3% 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.”
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 on the infrastructure bill and offers a full rundown of ways states can utilize potential funding and the impact that funding will have. To learn more, visit: web.csg.org/recovery.
