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Inflation is too high and the central bank needs to move quicker to get it under control by raising interest rates, said Gilbert Garcia, a managing partner at Garcia Hamilton & Associates in Houston.
“I wished we’d retire the word ‘transitory,'” Garcia said, at the CNBC Financial Advisor Summit on Wednesday, speaking of predictions that the recent rise in prices are temporary.
“Inflation is running at 6%, probably well over 6%, no matter how you look at it,” he added. “It’s pretty clear that it’s longer than transitory and it’s much hotter than their inflationary target.”
Episodes of U.S. inflation
Consumer price index, percent change from a year ago
20%
Post-WWII
Oil shocks
15
Korean War
10
Supply
Iraq invades
Late 1960’s
chain
Kuwait
Gas price
economic
disruptions
spike
expansion
5
0
−5
1950
’60
’70
’80
’90
’00
’10
’20
Note: Periods of heightened inflation are shaded.
Source: Bureau of Labor Statistics (CPI), White House (inflationary periods through ‘08). Data is
seasonally adjusted and as of Oct. ’21.
Episodes of U.S. inflation
Consumer price index, percent change from
a year ago
20%
1
4
15
10
2
7
5
3
6
5
0
−5
1960
’80
’00
’20
Post-WWII
Korean War
1
2
Late 1960’s economic expansion
3
Oil shocks
Iraq invades Kuwait
4
5
Gas price spike
Supply chain disruptions
6
7
Note: Periods of heightened inflation are shaded.
Source: Bureau of Labor Statistics (CPI), White
House (inflationary periods through ‘08).
Data is seasonally adjusted and as of Oct. ’21.
Episodes of U.S. inflation
Consumer price index, percent change from a year ago
20%
Post-
WWII
Oil shocks
15
Korean
War
10
Iraq
Supply
invades
Late
1960’s
chain
economic
Kuwait
Gas price
disrup-
tions
expansion
spike
5
0
−5
1950
’60
’70
’80
’90
’00
’10
’20
Note: Periods of heightened inflation are shaded.
Source: Bureau of Labor Statistics (CPI), White House (inflationary periods through
‘08). Data is seasonally adjusted and as of Oct. ’21.
He said it was time for the Federal Reserve to lift rates, saying that the government is currently keeping them “artificially low.”
The central bank has indicated that it could raise rates earlier than previously expected, with the first hike potentially coming as early as this spring. Rates have been near zero since the pandemic began in the U.S. in March 2020.
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Rising prices are most hurting those who can least afford it, Garcia added.
“Everyday Americans are having a very difficult time with food inflation, which is running very close to 30% and 40%,” he said.
“This 6% inflation is devastating,” Garcia said. “We’ve got to get that inflation back to a more normal, containable level.”