{"id":7732,"date":"2022-04-25T16:25:11","date_gmt":"2022-04-25T16:25:11","guid":{"rendered":"http:\/\/lonecandle.com\/?p=7732"},"modified":"2022-04-25T16:25:11","modified_gmt":"2022-04-25T16:25:11","slug":"americas-inflation-problem-is-weirdly-hard-to-fix","status":"publish","type":"post","link":"https:\/\/lonecandle.com\/?p=7732","title":{"rendered":"America\u2019s inflation problem is weirdly hard to fix"},"content":{"rendered":"\n

\n\n“Inflation is at a 40-year high<\/a> in the United States and accelerating<\/a> around the globe. The situation may very well get worse before it gets better, as Russia\u2019s war on Ukraine stands to exacerbate price pressures<\/a>, as does a new round of lockdowns<\/a> in China due to Covid-19.<\/p>\n\n\n\n

Among economists and experts, there\u2019s no strict consensus about what exactly is to blame. There are certain factors widely agreed upon that we\u2019ve been hearing about for months: supply chain woes, rising oil prices, shifting consumer demands. These concerns have hardly subsided. But there are other arenas where there\u2019s more disagreement, such as the role government stimulus has played in increasing prices, and the possibility that corporate greed<\/a> is an important factor.<\/p>\n\n\n\n

There\u2019s also no clear agreement on what the solution is. The Federal Reserve is starting to make moves<\/a> to try to tamp down inflation, but it\u2019s going to take time for that to have an impact. It\u2019s still uncertain<\/a> how aggressive the Fed will be or what risks those fixes could pose for the broader economy. The White House is trying<\/a> to combat price increases, but there\u2019s not really a ton it can do.<\/p>\n\n\n\n

\u201cThey\u2019re actually doing the right thing, they just don\u2019t have many tools,\u201d said Jason Furman, a Harvard economist and former adviser to President Barack Obama. He said one thing they can do and are doing is to be \u201crealistic in leveling with people\u201d that of course they don\u2019t like inflation, and this isn\u2019t a problem that will solve itself overnight.<\/p>\n\n\n\n

While a lot is unknown, one thing seems pretty clear to most: Much of this is the result of factors that have been brewing for quite some time; some back to the start of the pandemic, many even longer. As for when it will be over, we\u2019re likely to be in this situation for a while.”<\/p>\n\n\n\n

…<\/p>\n\n\n\n

“As much as many people say that they feel bad about the economy right now<\/a>, the economy is actually pretty decent. Unemployment is relatively low<\/a>, many people still have quite a bit of money to spend, and the recovery, in a lot of ways, looks pretty solid. But again, therein lies part of the problem: People have money to spend, but not so many places to spend it. \u201cThere are multiple things that are happening all at once right now. The pandemic is still going on, we still have supply chain bottlenecks around the globe, parts of the economy are getting up to speed,\u201d Amarnath said.”<\/p>\n\n\n\n

…<\/p>\n\n\n\n

“Expectations play a role here \u2014 when everybody thinks inflation is happening, then businesses start charging more and workers start charging more money to compensate, which makes the whole thing worse.<\/p>\n\n\n\n

\u201cOnce you have inflation, there\u2019s some self-perpetuation of it,\u201d Furman said. \u201cThere\u2019s some passthrough of wages to prices, and some passthrough of prices to wages. Inflation expectations matter.\u201d”<\/p>\n\n\n\n

https:\/\/www.vox.com\/the-goods\/22994731\/inflation-rate-russia-gas-prices-jerome-powell<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

“Inflation is at a 40-year high in the United States and accelerating around the globe. The situation may very well get worse before it gets better, as Russia\u2019s war on Ukraine stands to exacerbate price pressures, as does a new round of lockdowns in China due to Covid-19.<\/p>\n

Among economists and experts, there\u2019s no strict consensus about what exactly is to blame. There are certain factors widely agreed upon that we\u2019ve been hearing about for months: supply chain woes, rising oil prices, shifting consumer demands. These concerns have hardly subsided. But there are other arenas where there\u2019s more disagreement, such as the role government stimulus has played in increasing prices, and the possibility that corporate greed is an important factor.<\/p>\n

There\u2019s also no clear agreement on what the solution is. The Federal Reserve is starting to make moves to try to tamp down inflation, but it\u2019s going to take time for that to have an impact. It\u2019s still uncertain how aggressive the Fed will be or what risks those fixes could pose for the broader economy. The White House is trying to combat price increases, but there\u2019s not really a ton it can do.<\/p>\n

\u201cThey\u2019re actually doing the right thing, they just don\u2019t have many tools,\u201d said Jason Furman, a Harvard economist and former adviser to President Barack Obama. He said one thing they can do and are doing is to be \u201crealistic in leveling with people\u201d that of course they don\u2019t like inflation, and this isn\u2019t a problem that will solve itself overnight.<\/p>\n

While a lot is unknown, one thing seems pretty clear to most: Much of this is the result of factors that have been brewing for quite some time; some back to the start of the pandemic, many even longer. As for when it will be over, we\u2019re likely to be in this situation for a while.”<\/p>\n

…<\/p>\n

“As much as many people say that they feel bad about the economy right now, the economy is actually pretty decent. Unemployment is relatively low, many people still have quite a bit of money to spend, and the recovery, in a lot of ways, looks pretty solid. But again, therein lies part of the problem: People have money to spend, but not so many places to spend it. \u201cThere are multiple things that are happening all at once right now. The pandemic is still going on, we still have supply chain bottlenecks around the globe, parts of the economy are getting up to speed,\u201d Amarnath said.”<\/p>\n

…<\/p>\n

“Expectations play a role here \u2014 when everybody thinks inflation is happening, then businesses start charging more and workers start charging more money to compensate, which makes the whole thing worse.<\/p>\n

\u201cOnce you have inflation, there\u2019s some self-perpetuation of it,\u201d Furman said. \u201cThere\u2019s some passthrough of wages to prices, and some passthrough of prices to wages. Inflation expectations matter.\u201d”<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[217,165,1316],"class_list":["post-7732","post","type-post","status-publish","format-standard","hentry","category-article-share","tag-economics","tag-economy","tag-inflation"],"_links":{"self":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/7732","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7732"}],"version-history":[{"count":1,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/7732\/revisions"}],"predecessor-version":[{"id":7733,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/7732\/revisions\/7733"}],"wp:attachment":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7732"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7732"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7732"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}