In June 2022, we reached the US inflation rate 40 years high。 In the next two years, in the “Ebchic Silk”, both the consumer price index and the inflation ratio based on personal consumption expenditures dropped sharply, even if economic growth remained. Strong And the labor market has stayed health。 But I'm worried, core The inflation rate has recently stopped deceleration, moving sideways or further engraved.
Interesting discussions are emerging in both economy and Financial market Circle on the influence of Trump's potential inflation Policy agenda。 In addition, the ability of the Fed is swirling about the ability of the question. Independence Under the new political system.
The Americans have experienced an unusually low inflation rate for 10 years before the pandemic Giant spike 2021-22 General price level observed during inflation shock. There seems to be a negative effect on consumer spirit Sustained It ’s good for the disinstation cycle and probably played Important part When determining the election result of 2024.
The overall price level remains Promotion And the expectations of the people are still completely adjusted and have not adapted to the new level. The general price level is unlikely to revisit the level before pandemic. In fact, the public must probably not want such a result. deflation (Usually, negative inflation is due to the collapse of total demand). Instead, recovery of price stability (in the form of a low and stable inflation rate around the FRB) 2 % goal) It must be a preferred result.
Inflation has become a tricky company due to the recent inflation volatility and policy uncertainty. Several decades Theoretization and Discussion Have I haven't given it yet Economic consensus for drivers, which are the basis of inflation dynamics.
monetarism It was in its heyday from the 1970s to the early 1980s, and later achieved a short inf name. External surge The growth of US money supply from 2020 to 21 years. However, in light of the difficulties related to the prediction of the clear instability of money demand. Money speedIn general, it is permitted that the growth of money supplements is not usually provided with much insights in short -term inflated dynamics. Be evidence The effect of the threshold -If the inflation rate is low and stable, the relationship between the growth and inflation of money supply is weak or not. However, if the inflation rate fluctuates high, there is a stronger link between the growth of the money supply and the inflation.
Supporter of Price -level financial theory (FTPL) Inflation claims that it is mainly affected by financial policies, not monetary policy. It is assumed that the government's decision on the size of the budget balance and the size of public debt shares will play an important role. For example, if the financial authorities do not seem to have a permanent deficit, accumulate large -scale debt, and do not have an executable strategy to increase future profits and reduce future expenditures, it is the government. It is forced to expand the debt burden that leads the public and market to estimate that the government will do so. As a result, inflation expectations rise, which leads to an increase in inflation.
Theoretically intrigued, FTPL has not many supporters in the Central Bank community. Instead, some mainstream approaches to understand inflation dynamics are based on some Modern variants of Philips curve。
The Influid's Philips curve -based view incorporates three important factors: inflation expectations, economic loosening, and supply shock. The central insight is that the superheating economy, which is generally characterized by the tightness of the labor market, can produce upward price pressure. However, the relationship between the economic loosening and the degree of inflation is Unstable。
Economist found that the slope of the Philips curve suddenly became quite flat from very flat in the 2010s. Steep In the aftermath of the pandemic shock. Fundamental relationship It will be displayed Basically non -linear: The gradient of Philips curves is flat in the normal labor market, but is steep in the strict labor market.
From March 2020 to June 2022, the combination of extraordinary fiscal stimulation measures and ultra -high -adjusted monetary policy, and the combination of global supply chain confusion and energy price shock has distorted both supply and demand front lines. A shock has been generated. Limiting restricted monetary policies and supply constraints enabled subsequent growth.
Importantly, the status of the labor market Loose Happiness has risen because the number of vacant seats has dropped sharply in the past few years. External surge In both legal and illegal transitions from 2023 to 24 years Boost US labor supply and support Easily Wage pressure.
Expectations for inflation It is important。 As a Jerome Powell in the Fed chair observation: “The important point from recent experiences is that fixed and fixed inflation expectations, which have been enhanced by the active central bank's actions, can promote divergence without the need for sagging.”
There are concerns that there may be strict restrictions on the flow of labor across the borders, looking ahead. Generate Constraints on the supply side. But There is room for discussionTrump tariff proposal is also possible Generate Upward price pressure increase Inflation expectation.
Financial policy in the Biden era was excessively loose (budget deficit) Beyond $ 1 trillion every year) Contributed For inflation problems. Will the Trump administration seriously pursue an agenda for reducing deficit, or is there a stimulating tax cut that is not offset by reducing government expenditures?
In the short term, inflation has advantages. General demand is ready to be picked up behind proposed tax cuts, capital investment, and deregulation. The supplier may have a hard time catching up Key pocket The labor market tension may be experienced again. Higher However, improving productivity may provide several successors.
Vivekanand Jayakumar is an associate professor at the University of Tampa University.
