Phoenix-As US inflation soars to its highest level in 30 years, a Silicon Valley economist said that the chance of a recession is very small.

"[Inflation rate] is not a good thing, but it is not enough to plunge us into recession," Jim Rounds of Phoenix Rounds Consulting Group told KTAR News 92.3 FM. "There is no problem like inflation that will cause an economic recession, but if it is combined with several other negative factors, it may."

On Wednesday, the government stated that its October consumer price index surged 6.2% from a year earlier, the largest 12-month increase since 1990. The US Bureau of Labor Statistics reported that the Consumer Price Index in Phoenix has risen by 2.2% in the past two months and by 7.1%. Percentage since August 2020.

Under the fierce attack of COVID-19, the U.S. economy collapsed due to the lockdown in the spring of 2020. As a health precaution, businesses close or shorten business hours, and consumers stay at home.

"Usually, the government will provide some stimulus measures to fill the loopholes, and then we move on. In this case, we overstimulate everything," Rounds said. "In this case, we may have overstimulated everything.

"Interest rates are too low, and too much cash is provided directly to the public. Not only did the FBI fill this loophole, but it also poured a lot of money into this loophole, and at some point we must repay this money."

Rounds said that when so much money rebounds in the economy, it will bring inflation. He thinks it may take several months for things to calm down.

Behind the inflation problem is not just overstimulating the U.S. dollar—the supply chain is still disrupted, and labor shortages continue.

"The costs for producers have increased significantly, exceeding the costs for consumers, and these costs will be passed on to consumers," Rounds said.

The price of bacon has risen by 20% in the past year, and the price of eggs has risen by nearly 12%. Gasoline soared by 50%. Buying a washing machine or dryer will cost you 15% more than a year ago. Used cars are 26% more expensive.

"The great thing about economics is that everything will level off after a period of time. Some advisers to the federal government say that this may only be a nine-month to one-year issue.

"I think it will last for a while," Rounds said.

The Associated Press contributed to this report.

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