

How To Understand the Inflation We’re Seeing Right Now
4 snips Sep 23, 2021
Julia Coronado, founder of Macro Policy Perspectives with expertise in macroeconomic trends, and Laura Rosner-Warburton, a senior economist at the same firm, dive deep into the nuances of current inflation. They discuss whether recent inflation is truly transitory or a lasting change. The conversation highlights pandemic-driven shifts in consumer behavior and their impact on prices. They also analyze how monetary policies may worsen wealth inequality and explore the potential long-term economic transformations in response to supply chain pressures.
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Pandemic Spending Shift
- The pandemic dramatically shifted consumer spending from services to goods.
- This, combined with producers' recessionary cutbacks, led to a surge in goods prices.
Demand for Space and Cyclical Goods
- The increased demand for space during the pandemic drove demand for cyclical goods like cars, housing, and furniture.
- This demand surge, coupled with reduced supply due to recessionary expectations, led to significant price increases.
Inflation Spread
- Inflation, initially concentrated in sectors like vehicles and lumber, has broadened to include recreation goods, electronics, and furniture.
- This spread is primarily attributed to the chip shortage, shipping congestion, and increased input prices.