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Feeling the pinch from inflation

January 25, 2022

ASU economics expert on the part the pandemic has played, when we might expect some relief from rising prices

People aren’t just feeling pain at the pump these days — they’re feeling it all over. From gas to groceries, from cars to cough drops, consumers are paying more for almost everything and getting less in return.

With inflation at a 40-year high, the cost of consumer goods and services are up almost 7% from the previous year.

The pandemic is playing a big part — from higher materials prices and workforce shortages to longer wait times and supply chain issues. These elements combine to eat into everyone’s pocketbooks, and low-income families feel it especially acutely.

ASU News reached out to Dennis Hoffman, professor of economics and director of the L. William Seidman Research Institute at Arizona State University's W. P. Carey School of Business, to discuss how inflation has changed all our lives and when we might expect some relief.

Man in round glasses smiling

Dennis Hoffman

Question: What part has the pandemic played in our current situation? 

Answer: In a nutshell, inflation results from too much money chasing too few goods. Part of the problem stems from the fact that the United States — and the world — had essentially zero inflation for over a decade. The Federal Reserve attempted to stimulate the economy with an expansionary monetary policy that seemingly was ineffective at moving inflation up to a healthy/moderate 2% level. Then COVID-19 hit. Now it is imperative that the Fed reverses course and restricts the flow of money and credit. The solution: We need less money chasing a few more goods.

We added massive fiscal stimulus at a time when households developed a rabid appetite for consumer goods and away from services. Because of the shutdowns and problems with international relations with China, suppliers have been unable to meet the ravenous demand. Prices had to rise to allocate the limited supply. This is very similar to what happened in the late 1940s when it took time to convert from wartime to peacetime production. Today, it’s simply taking time to resupply post-pandemic. And the dramatic shift from demand for services to consumption of goods has been a big contributor.

Q: I’ve read some reports where our current inflation is costing households an extra $5,000. Many households don’t have an extra $5,000, so how can they mitigate this for now?   

A: This is based on averages. It has also hit households unevenly. If I am a renter in need of a new/used car and living paycheck to paycheck, I have been hit hard. If my cars are new and paid for, I own a home and my job is stable, I am essentially fine. Averages don’t work well here. Cases do.

Q: Two proposed ideas are that the Federal Reserve would raise the cost of borrowing to slow down demand and the IRS would issue larger tax refunds to give families relief. Do you see these adjustments as meaningful or effective? 

A: The former is traditional and is taking place. The latter will likely just fuel the fire and is unadvisable. While well intended, trying to solve this problem by providing more spending power will just exacerbate it. What we really need is to ramp up production and distribution and clear any bottlenecks in supply chains. Adding to supply — not fueling more demand — is the answer.

Q: How will this current period of inflation impact those who are considering retirement or retirees and their current portfolios?

A: Inflation and the Federal Reserve’s response to it will add headwinds to equity prices. But nominal interest rates should rise, which will give savers an alternative to stocks. Hopefully current and recent retirees have been selling stocks over the past few years and parking cash in a rainy-day fund.

Q: How long will this inflationary period last? Opinions among experts seem to vary.

A: We’re likely to see moderation by the end of 2022 unless COVID-19 surges, supply chains remain clogged, semiconductor shortages persist or the Middle East explodes and OPEC reduces the supply of oil. For perspective, in the 1970s, oil prices increased tenfold over the entire decade. At present, we don’t have any parallel long-term inflation pressure unless the Federal Reserve refuses to do its job.

Top photo illustration by iStock

Reporter , ASU News


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US News ranks ASU among best in nation for online programs

January 25, 2022

ASU Online earns top ranking in 2 categories and the overall No. 6 spot

Arizona State University’s online bachelor’s programs in business and online master’s in educational administration have been ranked No. 1 in the country by U.S. News & World Report.

In addition to the No. 1 rankings, ASU Online also earned top-three rankings in a total of 12 categories as part of the 2022 Best Online Programs report, including online bachelor’s programs for veterans (second), online master’s in electrical engineering programs (second) and online master’s in special education programs (third).

“These rankings are points of pride for our Academic Enterprise and provide students that are considering these online programs confidence that their academic experience in an online degree program at ASU will be of the highest quality,” said Nancy Gonzales, executive vice president and university provost. “Our robust portfolio of online degree offerings has been critical to the progress we have made in fulfilling our ASU Charter commitment of making higher education accessible at scale to today’s learners.”

Additionally, as part of its overall Best Online Bachelor’s Programs category, U.S. News ranked ASU among the top 10 in the country, at No. 6, ahead of Penn State World Campus and the University of Arizona. The online bachelor’s degree programs in psychology also ranked sixth in the nation. 

In 2021, ASU Online enrolled more than 81,000 undergraduate and graduate students in one of the more than 200 fully online degree programs. Since ASU launched its first online program offering in 2006, more than 62,000 students have graduated through ASU Online.  

The university has continued to be a leader in online education, expanding the program offerings to include the fine arts and hard sciences. ASU was the first university to launch an ABET-accredited undergraduate electrical engineering degree in 2013, and currently offers more than 120 undergraduate and graduate STEM programs, including biological sciences, biochemistry and astronomical and planetary sciences. More than 16,500 students were enrolled in an online STEM program during the fall 2021 semester.

“As a university, we are committed to ensuring that a robust slate of rigorous, high-quality degrees offered by a Tier I public university are made accessible beyond the walls of our physical campus,” said Phil Regier, university dean for educational initiatives and CEO of EdPlus at ASU. “We are honored to be recognized as a leader in this space and for the academic excellence of the programs offered through ASU Online.”

Additional 2022 Best Online Programs rankings for ASU include:

Education: The Mary Lou Fulton Teachers College ranked in the top 10 nationally for overall graduate programs in education. It also earned top rankings in the following speciality categories:

  • No. 2 — best online graduate education programs for veterans.
  • No. 2 — curriculum and instruction.
  • No. 4 — educational/instructional media and design. 

Engineering: Ranked in the top 15 nationally for its online graduate engineering programs, the Ira A. Fulton Schools of Engineering also received top-five rankings in two specialty categories:

  • No. 2 — management engineering.
  • No. 4 — industrial engineering.

Business: ASU’s online graduate programs in business (non-MBA) and the online MBA program were both ranked in the top 10 by U.S. News. The W. P. Carey School of Business also ranked among the top five nationally within the following specialty areas for the online MBA: 

  • No. 2 — marketing.
  • No. 2 — business analytics.
  • No. 3 — finance.
  • No. 3 — general management.
  • No. 4 — best online MBA program for veterans.

Criminal justice: The Watts College of Public Service and Community Solutions was ranked in the top 10 nationally for the online master’s in criminal justice. The program was also ranked fifth in the country for best online graduate criminal justice program for veterans.

U.S. News does not provide individual rankings for online undergraduate programs. The Best Online Bachelors Program rankings are based on four categories: engagement, services and technologies, faculty credentials and training, and expert (peer) opinion. 

For 2022, Embry-Riddle Aeronautical University and the University of Florida tied for the top spot in the Best Online Bachelors Program category.

More on the 2022 U.S. News & World Report online rankings

Top photo: Desiree’ Brionne Dillard earned her degree through ASU Online and studied for her MCAT while raising her family. Read more about her journey to medical school. Photo by Jill Richards

Carrie Peterson

Associate Director, Media Relations , EdPlus at Arizona State University