The president of investment firm BlackRock has said a “qualified generation” of Americans will face the shock of commodity shortages for the first time in their lives as supply chain disruptions continue to drive high inflation.
“For the first time, this generation is going to walk into a store and not get what they want,” BlackRock co-founder Rob Kapito said Tuesday at an energy conference in Austin, Texas, according to Bloomberg.
“And we have a very entitled generation that has never had to make sacrifices,” added Kapito, 65, who has an estimated net worth of more than $400 million and 2020 total compensation of $24.6 million earned.
“I would fasten your seat belts because that’s something we haven’t seen,” said Kapito, who blamed rising “scarcity inflation” on shortages of labor, energy and agricultural supplies.
BlackRock co-founder Rob Kapito said on Tuesday that “we have a very entitled generation that has never had to make sacrifices” who will be shocked at any bottlenecks to come
His comments didn’t indicate which generation of Americans Kapito considered “eligible,” and a BlackRock spokesman didn’t immediately respond to a query from on Wednesday.
Meanwhile, economists at Bloomberg warn that the average American should budget $5,200 more for higher prices this year — or $433 more each month.
Economists Andrew Husby and Anna Wong write that households can expect to pay thousands more in 2022 for the same basket of goods and services they used last year.
“The excess savings and wage increases built up during the pandemic will cushion these costs and allow spending to rise at a reasonable pace this year,” they wrote.
“But accelerated savings depletion will increase urgency for those remaining on the fringes of the labor force, and the resulting increase in labor supply will likely dampen wage growth.”
Economists estimate that higher food and energy costs will account for about $2,200 of the additional $5,200 households are expected to pay this year.
Bloomberg economists warn that the average American should budget an extra $5,200 for higher prices this year, or $433 a month
Nationwide, gas prices have stabilized but remain near the all-time highs set earlier this month.
On Wednesday, the national median price for gasoline was $4.24 a gallon, down from the record $4.33 set on March 11.
Data released earlier this month showed the consumer price index rose 7.9 year on year in February, the biggest rise in 40 years.
Inflation is likely to increase further in March as the impact of rising fuel prices is factored in.
The latest data showed prices of basic necessities rose sharply, with groceries up 8.6 percent year-on-year, housing up 4.7 percent, clothing up 6.6 percent and energy up 25.6 percent percent has increased.
Nationwide, gas prices have stabilized but remain near the all-time highs set earlier this month
A person walks past a gas station advertising gas prices in Los Angeles last week. Los Angeles was the first major US city to reach an average gas price of $6 or more
Most of the inflationary impact of the Russian invasion of Ukraine was not captured in February’s CPI, which does not reflect the impact of oil and commodity prices that soared in early March.
Still, President Joe Biden blamed Russian leader Vladimir Putin for the latest inflation data.
“A big contributor to inflation this month was a surge in gas and energy prices as markets reacted to Putin’s aggressive actions,” Biden said.
“As I’ve said from the start, there will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: the costs we’re imposing on Putin and his cronies are far more devastating than the costs we face,” he added.
For most Americans, inflation is far ahead of last year’s pay rises, making it harder for them to afford basic necessities like groceries, gas and rent.
As a result, inflation has become a top political threat to Biden and congressional Democrats as the crucial midterm elections draw closer.
Small business owners are now saying in surveys that this is also their primary business concern.
Inflation in the United States hit a new 40-year high in February at 7.9%
US economic growth is expected to slow sharply this year, particularly in the first three months of 2022, after the government reported on Wednesday that GDP grew at a healthy revised annual pace of 6.9 percent in the final quarter of last year.
Higher inflation is likely to weigh on consumer spending as Americans take a gloomier view of the economy.
Home sales have declined as the Federal Reserve has started raising the cost of borrowing, causing mortgage rates to rise sharply.
Exports may weaken as overseas economies are disrupted by Russia’s invasion of Ukraine.
For the January-March quarter of this year, the biggest drag will be a sharp drop in the amount of goods that companies are restocking on their shelves and warehouses.
Economists are forecasting that growth in the first three months of the year could fall as low as 0.5 percent and even slip into negative territory, spelling a recession.