US Inflation Forecasts and Statistics to Be Aware of in 2020

Inflation represents a sustained increase in the general prices of goods and services in any economy. The more the general price of goods and services increases, the less you can buy. 

It is important to learn more about the US inflation stats to make sure you understand the current economic system. 

Here are some US inflation forecasts and statistics to get you started: 

Fascinating Facts about US Inflation (Editor’s Choice):  

  • The average rate of inflation in the US is 3.22%
  • The medical inflation rate was at 4.75% in 2019
  • The food inflation rate came down to 1.8%
  • The lowest ever CPI housing utilities rate was in 1967 at 30.50 points.
  • The GDP growth rate for 2019 was 2.9%. 
  • US headline rate of inflation varied from 1.5% to 2.1% in 2019.

Since the outbreak of the COVID-19 pandemic, financial specialists all over the world predict upcoming inflation. How much will the Coronavirus affect the global economy? It remains to be seen. 

Here we go: 

US Inflation Rate Forecast

1. The projected inflation rate in 2020 is 1.9%.

(Source: Knoema)

The Federal Open Market Committee (FOMC) has made its forecast that the United States’ inflation rate for 2020 will average at around 1.9%. In 2021, it is set to increase to 2% and remain at this percentage throughout 2022. This shows that inflation will remain stable, according to the FOMC. 

2. Annual inflation rate in the US falls down to 1.5% in March.

(Source: Trading Economics)

The inflation rate has gone down more than people have expected it to go. In March 2020 it was at 1.5%, going down from 2.3% in February. Predictions actually pitted it to go to 1.6% but it went a bit lower.

This rate is the lowest it has been since February 2019 and it is mostly the result of gasoline slump which went down by 10.2%.

3. From 1800-2020, the US dollar has faced an average inflation rate Of 1.38% yearly.

(Source: CPI Inflation Calculator)

Recently, the Bureau of Labor Statistics released a consumer price index. It shows that prices in 2020 are estimated to be 1,939.48% higher than the average price of products since 1800. 

It seems that the real value of the currency has steadily increased. US dollar inflation statistics show that $1 during the 1800s had the same purchasing power as $20.39 now. Over 220 years, the difference has been of $19.39. 

4. The average rate of inflation is 3.22%.

(Source: Inflation Data)

While this doesn’t sound too bad, it can be when put into the context of the fact that the rate prices double every two decades. This means that average prices will double in 20 years, which can greatly impact the consumer’s spending power. The average annual inflation rate needs to go down, or else, consumers can be greatly affected.

The scary thing is that this is not only an arithmetic doubling, but it is also a compound doubling as well. It can result in multiplying the effects of inflation and eventually come up with 2275% inflation as a worst-case scenario.

Current CPI Rate in the USA

5. CPI inflation rate will stay within 2.1-2.3% in 2020. 

(Source: Knoema)

The Consumer Price Index (CPI) inflation rate is calculated based on many different factors. It is calculated by agencies like the UNDESA, IMF, OECD, USDA, and others. The CPI inflation has stayed 0.5% points more than the PCE inflation since 1970. 

It is predicted to stay between 2.1-2.3% in 2020. This is an increase from the 1.8% that was seen in 2019. Till 2024, the CPI inflation rate is set to remain around 2.3%. 

6. US target inflation rate for 2020 is 2%.

(Source: Financial Times)

The Federal Reserve has set the US target inflation rate at 2%, but they are considering a rule to let inflation run higher than the target. This significant increase in the interest rate policy has been set for years, but some policymakers are considering this new policy. The policy will make up for the lost inflation.  

7. The US education price inflation rate for higher education rose to 2.5% in 2019.

(Source: The College Post)

The US education price inflation rate has increased due to the overall costs for tuition, clerical costs, administrative salaries, and service employee costs. The annual cost for each factor in 2019 increased by 14.5% compared to the previous three years’ costs. 

The increase in inflation is even though utilities for faculty salaries, materials and supplies, and fringe benefits have all faced a reduction. The 20.2% decrease in these costs didn’t do a lot to lower the inflation rate, though. Miscellaneous services cost has stayed the same. 

And now let’s see what the global inflation rate is in 2020: 

8. The standard inflation rate for the world is 3.41%. 

(Source: Statista)

In 2019, the worldwide standard inflation rate was around 3.41%. In comparison, the USA’s average annual inflation rate was 3.21% – a bit lower.

US inflation expectations 2020 for CPI are around 2.1%-2.3%, which lower than the global expectation of 3.56%. 

US Wage Inflation Statistics

9. Wages rose year-over-year 1.7% in January 2019.

(Source: CNBC)

Wages were keeping up with inflation until January of 2019. In wage inflation vs. price inflation, wages need to rise with the cost of living, or else, the standard of living can fall. 

10. Wages did not grow as much as targeted. 

(Source: Economic Policy Institute)

By the end of the year 2019, in November, wage growth had slowed down. The nominal wage growth target was 3.5% to 4%, but the actual year-over-year for 2019 was only 3% for private employees. 

There have been calls to the Federal Reserve to raise interest rates in order to regulate the inflation rate since wages have not increased as hoped. This may be due to the shoddy job market. Employers don’t need to offer a high salary to get employees. 

11. The medical inflation rate was at 4.75% in 2019.

(Source: YCharts

The medical inflation rate is an important factor in the US consumer price index. Health care costs overall have significantly increased as compared to other factors under the CPI for the United States. When compared to the health care costs in the 1980s and 1990s, the prices have increased at an alarming rate. For example, the medical inflation rate in 2018 was just 2.01% and has nearly doubled in a year. 

US Historical Inflation Rate 

12. The average inflation rate since 2000 has been 2.27%.

(Source: Statista)

From 2000 to 2019, the highest inflation rate was in 2008 at 3.8%.

The lowest was -0.4% in 2009. The US inflation from 2009 to 2019 was 1.5%. The average inflation rate of the last ten year has been relatively lower due to the policies set by the government. 

13. The cumulative inflation rate in the US is 2,549.52% from 1914-2020.

(Source: SmartAsset

$1 in 1914 will be worth $26 in 2020. The cumulative inflation rate is 2,549.52%. The average rate of 3.24% yearly. 

14. The cost for the standard of living has remained At 2.3% in 2019.

(Source: U.S. Bureau of Labor Statistics)

Basic goods like food have an inflation rate of 1.8% in 2019. The inflation rate for making food at home is 0.7%, where dairy and meat products have the highest inflation rates, and fruits and vegetables have the lowest rates. On the other hand, eating outside the home has an inflation rate of 3.1%, where full-service meals have a 0.3% higher inflation rate than limited food service meals and snacks. 

Historic inflation on basic goods shows that there is a high cost of living because facilities like energy are at the highest inflation rate of 3.4%. Energy commodities have an insane inflation rate of 7.4%, where gasoline faces 7.9% inflation and fuel oil at 4.6%. Nevertheless, energy services are at -1.2%, with electricity at -0.4% and natural gas at -3.5%. 

15. US Inflation Rate during the Great Depression was -1.9%.

(Source: Inflation Data)

The Great Depression of 1930-1939 began on September 4th, 1929, when the stock market crashed. The crash of the stock market caused panic among investors, which led to a liquidity crisis. Banks started becoming averse to any risk and stopped giving out loans. By 1930, the stock market had rebounded, but by then, it was too late. 

US Consumer Price Index Stats

16. Food inflation came down to 1.8% from 2% in 2019.

(Source: Trading Economics)

Other price increases were recorded in shelters, medical care services, and medical care commodities. The core inflation rate remained unchanged at 2.3%, which doesn’t include items such as food and energy since they are volatile. 

17. The GDP growth rate for 2019 was 2.9%. 

(Source: The Balance

US GDP, inflation rate, and unemployment rates need to be looked at simultaneously to get a full account of the economic structure of the country. In 2019, the GDP growth rate was 2.3%, which is comparatively less than the 2018 GDP growth rate of 2.9%. The inflation rate for 2019 was 2.3% compared to 1.9% in 2018. The unemployment rate was 3.5% in 2019 and 3.9% in 2018. 

US GDP growth vs. inflation includes a larger debate of whether an increase in these numbers actually accounts for a better standard of living for the general public. The growth in Gross Domestic Income can be attributed to President Donald Trump’s tax plan that was introduced at the end of 2017. The tax plan gave significant tax cuts to the wealthiest in the country, which increased their overall earnings. This resulted in an increase in the overall GDP of the country. 

However, the decrease in unemployment rates is a result of the policies set by the previous government. The growth in GDP also doesn’t signify an overall increase in the standard of living since wage rates have not managed to keep up with the inflation rates. 

18. The US inflation GDP deflator value for 2018 was 2.326%.

(Source: World Bank

In 2017, the US inflation GDP deflator value was 1.9%. In comparison, the world’s inflation GDP deflator for 2018 was 2.773% and 3.4% in 2017. 

The inflation GDP deflator value represents the price change rate of the economy as a whole. This includes the price level of all-new, final, and domestically produced goods and services in the country over a year. 

19. US headline rate of inflation varied from 1.5% to 2.1% in 2019.

(Source: FX Street)

In 2019, the US headline rate of inflation varied by 0.6%. The Personal Consumption Expenditure (PCE) price index shifted from 1.3% to 1.6%. 

20. CPI housing utilities reached an all-time high of 268.24 points in 2019.

(Source: Trading Economics)

From 1967 to 2019, the average CPI housing utilities value was 140.08 points.  In December of 2019, it reached an all-time high of 268.24 points. This shows that the biggest fear of millennials of never being able to afford housing on the current wage rate is coming true. Housing is getting more and more expensive with every passing year. The lowest ever rate was in 1967 at 30.50 points.

21. The lowest CPI housing utilities rate of 2019 was in January. 

(Source: Trading Economics)

In January 2019, the CPI housing utilities rate was 262.2 points. It grew rapidly every month at a steady, reaching an all-time high since 1967 of 268.24 points. 

22. The highest CPI transportation value for 2019 was 215.3 in May.

(Source: Trading Economics)

The year began at a low of 202 in January and ended at 208 points in December. May was the highest ever in the past five years, reaching an all-time high of 215.3 points. Comparing that to the low of below 50 points in the 1960s, the price of transportation has inflated a lot. 

23. 2020 started with a low current interest rate of 1.75%.

(Source: Trading Economics)

The Federal Reserve has decided to leave the target range for the fund rate unchanged between 1.5% and 1.7%. The objects of the Federal Reserve are to maintain the inflation at 2%, create strong labor market conditions, and continue a sustained expansion for the economic activity. 

In Conclusion

The whole 50 cent thing might be a joke, but inflation certainly isn’t. If things continue this way, the living conditions will get considerably worse.

The US inflation forecasts and statistics are crucial for any American citizen. So keep yourself updated constantly!

See you around, on SpendMeNot, everyone. 

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