Times Series Analysis on Inflation in the U.S. under COVID-19 Pandemic

Abstract

The COVID-19 pandemic has affected the economic environment in the U.S, particularly in inflation, which is experiencing its highest levels in decades. The reasons for this high inflation might be change in supply relations and consumer habits, logistics bottlenecks and policy reasons. The Fed has raised interest rates several times in hopes of a quick return to pre-pandemic inflation rate, but it is still in a high level around 0.08. Given the complex international situation, it is obvious that high domestic inflation and prices will significantly drag down GDP and economic growth. However, if reducing the current situation of high inflation in a short period, it is obviously not only by raising interest rates. The correct path is to find the real causes of inflation and solve these. Unfortunately, the exogenous shocks not only frequently affect the stability of price and inflation but fuzz the real reasons behind inflation, which leading to a difficult process of finding the causes.