IMF Predicts Continued High Inflation Heading Into 2024

One of a long list of worries facing Democrats as they look ahead to the 2024 elections is public perception of the current administration’s economic record. According to a Sept. 13 Quinnipiac poll, the broad public view is that 60 percent disapprove of the way President Joe Biden is “handling the economy.”

That’s usually the kind of economic reading that prompts campaign managers to rethink their life choices. But here’s the thing about these polling numbers and the long-run, underlying issue behind the economic discontent – inflation…

The battle to tame inflation may be far from over. And the temptation of Wall Street economists, Democratic soothsayers and assorted courtiers to declare victory over price hikes may be dangerously ill-timed.

That’s a major takeaway from a new report from the International Monetary Fund that reviewed “…over 100 inflation shock episodes in 56 countries since the 1970s, including over 60 episodes linked to the 1973–79 oil crises.”

In other words, a comprehensive review of the history of inflation spikes over time and worldwide. The conclusion:

We document that only in 60 percent of the episodes was inflation brought back down (or “resolved”) within 5 years, and that even in these “successful” cases resolving inflation took, on average, over 3 years. Success rates were lower and resolution times longer for episodes induced by terms-of-trade shocks during the 1973–79 oil crises. Most unresolved episodes involved “premature celebrations”, where inflation declined initially, only to plateau at an elevated level or re-accelerate. Сountries that resolved inflation had tighter monetary policy that was maintained more consistently over time, lower nominal wage growth, and less currency depreciation, compared to unresolved cases. [emphasis added]

The plain English version: It takes a lot more time and determination to end inflation than politicians and market timers are willing to admit.

And in those occasions when they do get their way and inflation-fighting measures are eased too soon, inflation can roar back to life.

This obviously doesn’t help, say, an already questionable incumbent president seeking reelection win over the majority of voters who think he’s done a bad job on the economy.

No matter how long and loud Biden’s claque insists things are coming up roses everywhere, the reality is far more complex. People still feel inflation’s effects. They see it not only in the headline numbers on items like gasoline; they feel and pay for inflation in a host of other ways, from school tuition to health care, and more.

And if the IMF research is right, it may yet be a while before inflation is fully, completely tamed…which could mean more public discontent and more pain for certain members of the political class.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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