Could Biden's spending plans push inflation even higher?

With President Joe Biden this week signing the $1.2 trillion infrastructure bill and Congress now negotiating the $1.75 trillion Build Back Better plan, questions are being raised about what the spending bills' impact will be on inflation. After all, these bills will be funneling new funding into an economy that's seeing consumer prices rise at their fastest rate in 30 years. 

But some economists say fears about the spending bills' impact on inflation are overblown. The reason, they say, is that the spending bills will spread investment over a number of years, beginning in 2022 — a point when supply-chain issues currently pushing up prices will likely have subsided.

"The timing is really important — that money will only start flowing into the economy maybe in the end of next year and in 2023 and on," said William Foster, vice president and senior credit officer at Moody's Investors Service. "We think inflation will moderate by the middle of next year. By then, the supply-chain issues will work themselves out."