text: Consumer spending growth has also reached record levels. This year’s data is on pace to realize an 8% increase in consumer spending over 2020, with expectations for 2022 to show 4.3% growth. 2021 has proven to be the strongest consumer spending growth since World War II.So with consumer demand near all-time highs and continued constraints on supply chain and logistics, there’s a case to be made that interest rate hikes will not be as effective in combating inflation as the Fed hopes. Raising interest rates will, however, have a dampening effect on economic growth. This is the stagflation scenario the Fed faces going into Powell’s second term. – T.W.ECONOMIC WARNING INTSUMCommerce Department reports high inflationThe Commerce Department reported on Wednesday that the Personal Consumption Expenditures Index (PCE) has increased by 5% over the last year ending in October. Excluding food and energy prices, the inflation measure the Biden Administration and the Fed tend to prefer, came in at 4.1%. (AC: Different in this report is the simple fact that this inflation gauge of 5% came from a government entity. This shows that Washington is beginning to acknowledge the whirlwind of inflation we’ve been living in for the past 6 months. Moving forward, inflation will likely continue to be higher than reported by the government, especially as energy prices continue to increase. – T.W.)Chip plant in TexasOn Tuesday, Samsung announced that it would be investing in a 5 million square meter facility near Austin, Texas. The facility will be used as a semiconductor factory and will cost approximately $17 billion to complete. The global economy faces a massive chip shortage, and Samsung hopes to alleviate that shortage with this facility set to start construction in early 2022 and become operational by 2024. (AC: Without production beginning in the United States, experts have warned that the chip shortage could last well into at least 2023, which would put an unparalleled strain on the electronics and automotive industries, pressuring prices to increase alongside never-faltering demand. – T.W.)The information provided by Forward Observer in this report is for informational purposes only. It should not be considered financial advice. You should consult with a financial advisor to determine what may be best for your financial needs.— END REPORT