US President Joe Biden can repeat the mistakes of one of its predecessors – the 39th President Jimmy Carter – in the fight against the economic crisis. This was stated by the main economic adviser to the International Insurance Company Allianz Mohammed El Erian on the air Fox News TV channel.
According to El Erian, the new Omicron strain of Coronavirus causes anxiety in the markets. It can strengthen record high inflationary pressure, as well as to lead the US economy to the stagflation of the 1970s. “We travel less. We go to restaurants less, and we have additional restrictions and rules,” the economist said. American markets are concerned that all these circumstances will lead to an increase in inflation and aggravation of problems with global supply chains. “The connection of these two things, low growth [Economy] and high inflation is stagflation, and this is what is worried about the market now,” he noted.
The economist recalled that Jimmy Carter, who held the post of president of the United States from 1977 to 1981, tried to overcome the stagnation in the 1970s. At that time, it was due to the increase in energy prices due to the embargo on Arab oil, a decrease in economic growth and the growth of unemployment. The economic problems and the lack of their decisions have negatively affected the political career of the then president, who could not hold out longer than one period, Al Erian noted. He also called on the Chairman of the Board of Governors of the Federal Reserve System (Fed) of Jerome Powell to avoid the previous mistakes and to deter inflation to the main objective of the department. Earlier, Biden announced the intention to preserve Powell at the current post for another time after graduating from its powers in February 2022.
“I think it’s time to change the Fed Policy,” said Economist Allianz. In his opinion, inflation is not temporary, and the Fed is important to realize it. “The worst thing that may happen – in addition to the interruptions in the supply, with which the Fed cannot do nothing, and the lack of labor is unjustified expectations, because of which we will change our economic behavior even faster,” he said.
Inflation in the US broke the record since 1990, while being higher than all analysts’ forecasts. This contributed to high energy prices, housing, food and vehicles. In turn, confidence in the future of American companies reached a minimum. Entrepreneurs explained that all the fault of the growing costs of production and wages, because of which they lose profits.