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In 2022, Americans are dealing with the worst inflation in over 40 years, with the year-over-year inflation rate at 9.1% in June.
Inflation is growing more quickly in some places than others, though. In order to determine the cities where inflation is growing the most – and thus is the biggest problem – WalletHub compared 23 major MSAs (Metropolitan Statistical Areas) across two key metrics related to the Consumer Price Index, which measures inflation. We compared the Consumer Price Index for the latest month for which BLS data is available to two months prior and one year prior to get a snapshot of how inflation has changed in the short and long term.
|Growing the Most||Growing the Least|
|1. Anchorage, AK||19. San Diego, CA|
|2. Phoenix, AZ||20. San Francisco, CA|
|3. Atlanta, GA||21. Boston, MA|
|4. Seattle, WA||22. New York, NY|
|5. Baltimore, MD||23. Honolulu, HI|
Cities Where Inflation is Growing The Most
|Overall Rank||MSA||Total Score||Consumer Price Index Change
(Latest month vs 2 months before)
|Consumer Price Index Change
(Latest month vs 1 year ago)
|3||Atlanta-Sandy Springs-Roswell, GA||56.22||2.40%||11.50%|
|6||Miami-Fort Lauderdale-West Palm Beach, FL||49.36||2.50%||10.60%|
|7||Houston-The Woodlands-Sugar Land, TX||48.28||2.80%||10.20%|
|9||Tampa-St. Petersburg-Clearwater, FL||45.22||1.30%||11.20%|
|11||St. Louis, MO-IL||29.95||2.40%||8.40%|
|12||Dallas-Fort Worth-Arlington, TX||27.65||1.00%||9.40%|
|13||Riverside-San Bernardino-Ontario, CA||26.73||1.10%||9.20%|
|17||Los Angeles-Long Beach-Anaheim, CA||12.48||0.90%||7.70%|
|19||San Diego-Carlsbad, CA||11.40||1.20%||7.30%|
|20||San Francisco-Oakland-Hayward, CA||11.00||1.70%||6.80%|
|22||New York-Newark-Jersey City, NY-NJ-PA||3.85||1.10%||6.50%|
|23||Urban Honolulu, HI||2.54||0.60%||6.80%|
Ask the Expert
Associate Professor of Economics, Quinnipiac University and writes regularly at Global Economics on Substack
What are the main factors currently driving inflation?
The main driver of US inflation today is the excessive government spending and money printing that occurred in 2020 and 2021. In an effort to save the economy during the COVID pandemic, the US government increased spending by 50% in 2020 and again by 44.4% in 2021. The money supply increased by about 25% in 2020 and 16% in 2021. That means, relative to 2019, spending increased by 116%, and the money supply increased by 45% over two years. That is an unprecedented increase in government fiscal and monetary stimulus both.
To put that into perspective, we increased spending by only 10% and the money supply by about 8% during the Great Financial Recession of 2008/09. That seemed very high at the time and was widely seen as leading to the burst of inflation we saw in 2011 when inflation reached 3.8%. That inflation seemed high at the time, but the Fed had already been cutting back on money growth (it was down to 2.5% already in 2010) and so inflation slowed soon after and we averaged 2% inflation from 2010 until the pandemic.
As a final basis for comparison, in the 1970s when we saw double-digit inflation in the United States, the Fed printed money at the alarming rate of 10-13% annually, but usually only for a few months here and there. We were still printing at 24% in March 2021. That is the fastest rate of money growth since the Fed’s founding in 1913.
It takes 6-18 months for large surges in the money supply to start feeding into inflation. So, all that money is finally showing up in inflation numbers now in 2022 and will continue for at least a year and possibly more depending on what the government and the Fed does now. If they can get spending and money under control, inflation will subside but it will also be recessionary.
We are unfortunately just entering the painful period now in terms of inflation, higher interest rates, and – soon – rising unemployment as well.
Since inflation hit a 40-year high of 9.1%, what can be done to slow down the rapidly increasing price gains?
The Fed must raise interest rates and slow money growth while Congress also keeps spending restricted. Those are two painful things, but the only things that will tame inflation over time.
Unfortunately, there is not much that can be done immediately. The flood of money and spending that was pumped into the US economy in the past two years must pass through the economy like a tidal wave bringing inflation up and forcing people to spend down the savings they all accumulated during the pandemic. It is a brutal process and will be hardest on those in society least able to handle it. That is, those in the lower income categories.
What does the current inflation rate tell us about the future of the economy?
The current inflation rate tells us that our past policy was too aggressive. We did not know at the time. The Covid pandemic was unique and policymakers can be forgiven for throwing everything plus the kitchen sink at saving the economy. Now, however, we are paying the price.
The future of the economy will be decided now. Over the coming year, we will have inflation and a recession. Where we go from there depends on what policies we implement and what happens globally. If the war in Ukraine continues and continues to pull Europe down especially, then it will harm the global economy and make it harder for the American economy to recover. If our government continues to increase spending, it will make it harder to control inflation and eventually finance our spending with debt. That would mean higher taxes, more hardship, and slower economic growth.
If instead, we keep government spending under control, taxes at least steady, and continue our current fight against inflation, then the US economy can come out the other side of the storm stronger and poised for balanced growth. We have a strong, resilient workforce and we can push forward with new technologies, greener technologies, and a wide range of innovations that improve the lives of everyone.
For the methodology and the full report, click HERE