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Confronting the Inflation Beast

The recent news on the economy has been disappointing. The CPI rose 7.5 percent over the twelve months ending in January, shown in the chart below. This increase is the briskest since March 1982. Moreover, outsized price increases have become more widespread across various categories of goods and services, an indication that inflation has become … Continue reading Confronting the Inflation Beast

What Will it Take to Tame Inflation?

At the late-January FOMC meeting, the Fed acknowledged that it had fallen behind the curve on inflation and would likely take more aggressive tightening actions than forecast in December to bring inflation back under control. In mid-December, the target for the federal funds rate was 0 to 25 basis points (also the current target), and … Continue reading What Will it Take to Tame Inflation?

Inflation: Is it Really Transitory?

Source: “Transitory.” Merriam-Webster.com Dictionary, Merriam-Webster https://www.merriam-webster.com/dictionary/transitory.  Concern about inflation has been mounting over recent months and was punctuated by the 0.9 percent increase in the CPI for October (11 percent at an annual rate). Public opinion polls are indicating that concern about the inflation outlook has been steadily rising. Meanwhile, Fed policymakers have been saying that … Continue reading Inflation: Is it Really Transitory?

Placing the Expansion in Perspective

It bears repeating that this business cycle has been like no other. The COVID shock produced the steepest contraction in output but the shortest recession on record. Spending on nearly everything except food purchased from grocery stores dropped precipitously. In the face of the lockdown, production of nearly everything also dropped off sharply. In a … Continue reading Placing the Expansion in Perspective

Supply Restraints Continue to Bedevil the Economic Expansion

Restraints on the supply of goods and services continue to hold back economic expansion and boost inflation. Ongoing restraints on supply were confirmed by the employment report for September which showed overall job gains of only 194 thousand in contrast to expectations of 475 thousand. To be fair, private payroll increased 317 thousand in September … Continue reading Supply Restraints Continue to Bedevil the Economic Expansion

Has the Inflation Dragon Been Slayed?

The Consumer Price Index (CPI) for August was greeted with relief. Headline inflation slowed to 0.3 percent from 0.9 percent two months earlier while core inflation (with volatile food and energy prices removed) slowed to only 0.1 percent in August. The moderating of inflation is illustrated in the table below. Note that the increase in … Continue reading Has the Inflation Dragon Been Slayed?

Infrastructure: Time for a Fresh Look

Source: Merriam-Webster Dictionary Infrastructure is the set of fundamental facilities and systems that support the sustainable functionality of households and firms, serving a country, city, or other areas,[1] including the services and facilities necessary for its economy to function. (Source: Wikipedia) The term infrastructure entered the vocabulary of public policy discussions in the 1970s when … Continue reading Infrastructure: Time for a Fresh Look