WASHINGTON — With the Inflation Reduction Act now signed into law by President Biden earlier this week, you may be wondering when inflation will go down. Well, Americans may be waiting for a while.
According to The University of Pennsylvania's Penn Wharton Budget Model, "The act would have no meaningful effect on inflation in the near term."
One reason is that many of the bill's policy changes will take several years to implement. President Biden and White House aides disagree.
They believe the new law will have some impact because it decreases the deficit.
According to White House economists, lower deficits have helped reduce inflation. Additionally, the White House points to new climate change-related tax credits that will help American families offset the high costs.
CURRENT INFLATION IN THE U.S.
The current inflation rate sits at around 8.5%. If you spent $100 on goods and services last year around this time, you are paying around 8 dollars and 50 cents more for those same services and goods.
Currently, many economic forecasts have inflation returning to 2 - 4% by the end of next year. Those forecasts say it requires the economy to keep slowing down. A slowing economy has drawbacks.
Companies may be less inclined to hire new employees or offer a pay raise if profits aren't as high.
Higher interest rates now mean debt, like mortgages, is more costly.
Expect the inflation fight to be at the center of this year's midterm election. Many Republicans are campaigning on cutting taxes and government spending to help fight inflation.
Democrats are campaigning on policies to offset the cost of inflation, like limiting how much child care costs or providing new child tax credits.
As the country waits for inflation to improve, some Americans face big decisions.