According to the latest government report, the U.S. inflation rate is 2.5 percent. But some people want to know why the Federal Reserve Board keeps raising interest rates if inflation keeps ticking along at that rate. What many people don’t realize is companies are raising prices faster than Trump can say he doesn’t tell lies. In fact, Trump’s trade war with China will fuel inflation in 2019. And the tariffs he imposed on steel and aluminum will force automakers to raise prices on cars and trucks in 2019. Plus, shipping costs are out of control, according to food giants like Nestle SA, Coca-Cola, Mondelez, and the Hershey Company.
According to a Fox Business News report, those companies plan to raise food prices by at least 12 percent in 2019. Food executives say higher ingredient costs and freight costs are impacting profit margins, and stockholders don’t like it when that happens. Kellogg executives said their third-quarter profit projection was off because of record-high freight costs. Kellogg hasn’t raised prices yet, but according to food industry experts, Kellogg will follow the other food companies that plan to make food more expensive in 2019.
The increase in food prices is just the tip of the inflation iceberg, according to several economists. All consumer products will cost more in 2019. And those same economists say a recession may hit the U.S. in 2019 for several reasons. The first reason may surprise some people. The financial people see a recession coming because the rate of interest on two-year Treasury notes is the same rate as 10-year Treasury notes. That rate sits at 2.8 percent right now. The Federal Reserve Board plans to continue raising interest rates in 2019, and that will impact stock and bond prices, according to Wall Street analysts.
Some economists say the inflation rate is more like ten-percent, and they expect that figure to climb in 2019. But the current administration doesn’t seem to care about a possible recession and high-than-normal inflation. Trump seems to dance around that issue by saying the economy is on fire. He also thinks there’s no stopping the economy now that his make America great again message seems to be working. But some people want to know what that message really means. They say America doesn’t need help being great. They need help dealing with inflation and a possible recession.