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What's really going on with inflation? Economists weigh in

Jaimie Ding, Los Angeles Times on

Published in Business News

People with debt are, Feler said. For mortgage holders, the value of their homes is increasing, but their mortgages are locked in at a low interest rate.

"They actually are experiencing a negative real rate of interest," Feler said. "So they're paying such a low rate of interest relative to inflation that they're better off."

Suppliers of construction and manufacturing materials such as lumber and steel are also doing well, said Lynn Reaser, chief economist at Point Loma Nazarene University.

"In many cases, firms are not asking even what the cost is. They're just desperate to get raw and semi-processed materials," Reaser said.

How is inflation affecting the job market?

Higher prices are placing financial pressure on American households, especially lower-income families, but there's an upside. With U.S. unemployment at a record low and companies scrambling to fill jobs, workers have bargaining power for higher wages, Reaser said.

 

"They are increasingly demanding larger raises to accept those jobs," Reaser said.

Though real wages have declined on average across the workforce, some segments have been doing particularly well, such as leisure and hospitality workers, Feler said.

"Demand for their labor is so high that their wages have gone up faster than the rate of inflation," Feler said.

What is the Federal Reserve doing about it?

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