Reducing Inflation will be More Challenging due to Spending in the ‘Inflation Reduction Act’

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TL/DR –

BlackRock CEO Larry Fink said that achieving a 2% inflation rate is challenging due to numerous factors, including a trillion dollars of fiscal stimulus from the CHIPS Act, the Infrastructure Act, and the IRA, and poor legal immigration policies. He pointed to increased spending on services and resultant service inflation as primary culprits for high inflation rates. Fink also highlighted the rising cost of insurance, long-term healthcare, and experiences (like attending a concert or sporting event) as contributing factors to inflation.


BlackRock CEO Larry Fink Discusses Challenges Reaching 2% Inflation

BlackRock CEO, Larry Fink, during an appearance on CNBC’s “Squawk on the Street,” expressed skepticism about the ability to achieve 2% inflation. He cited various factors, including the trillion dollars of fiscal stimulus from the CHIPS Act, the Infrastructure Act, and the IRA.

“Even amid mounting enthusiasm, it never reached the 2% mark,” Fink said.

When asked by co-host Sara Eisen if he anticipated reaching the inflation goal, Fink simply responded, “No.”

Fink elaborated on the challenges, “The restructuring of our economic policy, a trillion dollars of fiscal stimulus, and restrictive legal immigration policies are all driving forces. Each contributes to job inflation.”

Furthermore, Fink highlighted the role of service inflation which has resulted from shifts in spending patterns. He noted increased spending on services and elevated insurance costs due to aging infrastructure and more frequent accidents. He pointed out that these factors were all reflected in recent inflation figures.

Fink continued, “Central banks struggle to control service inflation. For example, the cost of products like Nike or Adidas shoes has remained relatively stable over 30 years. However, experiences such as attending sporting events or concerts have seen significant price hikes, demonstrating that goods have remained stable, but the cost of services has skyrocketed.”

The Ian Hanchett Twitter post provides more insight on the issue.

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