Critics are claiming the American Rescue Plan was too ambitious as fiscal stimulus. The data suggests today's inflation is due to the speed with which the economy is adding jobs, not the number of jobs added. As such, critics are really wishing for a slower recovery with a slower pace of job growth.
As the year ends, the final three inflation prints are more likely to be on the hotter side of what policymakers are comfortable with, especially due to developments in motor vehicle and air travel prices.
It means that the White House and Congress should, where feasible, use targeted fiscal policies and structural reforms to equitably address the demand- and supply-side challenges that contribute to inflationary pressure.
If we are going to take the supply side seriously - something that may have to happen to support the kind of demand-side policy required for maximum employment - we need to get serious about measuring it.
