Here is ONE good reason why US inflation may continue to rise in 2024;
Government spending.
According to Andreas Steno Larsen, former chief analyst at Nordea Bank and leading partner in Steno Research, inflation in the US might very well go up as a consequence of the government increasing its spending to compensate for rising inflation in the past year.
Every year in the US, on January 1st, COLA – the Cost-Of-Living-Adjustment raises the SSI – Social Security and Supplemental Security Income according to the past year’s inflation rate.
So, social benefits go up if the past year has experienced a rise in inflation. This is done to shield welfare recipients from rising prices on goods and services.
On January 1st 2024 the SSI was raised with 3.2 percent.
With the previous years of rising inflation the annual adjustment of welfare benefits creates a dangerous push for even MORE inflation in the new year, since more government spending does not decrease the amount of money in circulation but rather increases it.
In fact, if the past year has brought a rise in inflation the government should lower the amount provided through Social Security and Supplemental Income to prevent inflation rising even further in the new year.
Of course this will never happen when voters punish a government that takes away their social benefits.
But again, the voters forget that the only people to pay the bill for government spending – and rising inflation – are the voters themselves.
Government spending is the greatest driver for inflation – when the government increases the amount on welfare checks every year to compensate for the rise in inflation – due to past government spending – the government creates a vicious cycle.
The best thing the US population can do to improve the US economy in the long run, is to vote for less government spending, that they would have to cut their own welfare checks by a considerable amount.
With the latest approximately 60 billion dollar financial allocated to Ukraine-related activities in the war against Russia.
Instead Steno argues that we risk many years of higher inflation, since it is hard to get rid of rising inflation, once it has begun.
That’s why ordinary people should care very much about how big checks their government will be handing out, because the people will be paying the bill, either through taxes or through inflation.
So,
When 2025 comes around, remember to wish for a drop in inflation, or COLA – the Cost of Living Adjustment, might just raise the SSI – Social Security and Supplemental Income, yet again.
