Inflated costs don’t necessarily mean less consumer spending

Runaway inflation is driving up your bills on everything from groceries to car prices to rent. But economists are finding these higher cost aren’t decreasing spending.

Chief Economist and State Economic Forecaster at Arkansas Economic Development Institute and UALR faculty Michael Pakko believes that as painful as the current inflation may be, it doesn’t necessarily mean trouble down the road.

“It appears that the economy is fairly strong,” Pakko said, adding “…there was a lot of pent up demand during the pandemic where people weren’t able to get out and spend, and we’re still experiencing a little bit of that playing out.”

“definitive answer would require a crystal ball, which I don’t necessarily have at my disposal,” Pakko explained, “…the expectations of Federal Reserve policymakers are that inflation will come down gradually over the next couple of years.”

Read the full article from THV11 here.