Inflation

The policy mistake worth worrying about isn’t the speed of taper per se; it's the signal that taper sends about the timing of liftoff in interest rate policy.

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.

“Real wages” are often presented as a neutral measure of the ability of households to buy definite quantities of real goods after adjusting for changes in both prices and wages. In reality, "real wages" explain far less about household economic well-being than these stories confidently imply.

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.

The Fed has chosen to double down on an inflation-oriented framework for setting monetary policy. While there are some advantages in the current environment to an “average inflation targeting” scheme that affirmatively permits inflation to rise at least modestly past 2%, this approach is not particularly robust to a scenario