What’s behind inflation? Economists may have changed their minds: Planet Money : NPR

LOIC VENANCE/AFP via Getty Images

LOIC VENANCE/AFP via Getty Images

Economists say inflation is too much money chasing too few goods.

But some Other Will cause inflation to continue.

Think back to the 1970s, the last time the U.S. had persistently high inflation, when people were most worried about rising wages. The prices of goods and services were high. Workers expected prices to be even higher next year, so they asked for raises to keep up. But then companies had to raise prices even more. Then workers asked for more raises. This is called a wage-price spiral.

So when prices started rising again in 2021, economists and the Federal Reserve again worried that rising wages would become a big problem. But the wage-price spiral doesn’t seem to be happening. In fact, on average, wages haven’t kept pace with inflation.

Now people are worried about a completely different spiral: profit– Prices spiral upward. On today’s show, we discuss why some economists are looking at inflation in a new light.

This episode was produced by Sam Yellowhorse Kesler, designed by Katherine Silva, and assisted by Josh Newell. It was fact-checked by Sierra Juarez and edited by Jess Jiang.

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