Consider the pandemic-enabled material disruptions, the massive amount of money printing, and legislative motions like raises to the minimum wage.
Conditions have not been so ripe for inflation in a long time.
Conditions have not been so ripe for inflation in a long time.
Doubt that has much if anything to do with it. According to this study[1], increases of 10% to the minimum wage are correlated with only a 0.36% increase of prices, and minimum wage increases may decrease prices.
[1] https://www.upjohn.org/research-highlights/does-increasing-m...
It's possible this current wave of anecdotes of price increases is indicitive of a large wave of inflation. It's also possible it is just a short lived mismatch between the demand economy ticking on slightly before the supply economy does.
I assumed it was due to the increasing income/wealth gap. You have automation and cheaper labor from other countries reducing the price of labor for a substantial amount of people, seen in the lack of meaningful rise in wages for decades.
You also have the US splitting into very desirable areas seeing lots of increase in prices, but more of it seeing price decreases due to lack of demand. Concentration of businesses that offer higher paying job opportunities contributes here, as well as people’s preferences.
If you don't employ anyone, the unemployed still have to eat which means corporate savings grow at the expense of the unemployed. Of course, investing your savings into growth is fine, because that will both employ people and net a return for your business.
Why aren't companies growing their business? One problem is that there is not enough consumer demand to justify it. Why is there not enough consumer demand? Because people are unemployed or underemployed. It's a vicious cycle.
I do not see the connection here. It seems more direct to say that the supply and demand curves for labor have shifted in such a way that the price of labor has gone down for the labor many people are selling.
>Of course, investing your savings into growth is fine, because that will both employ people and net a return for your business.
That’s one of those how to draw an owl things. Maybe if the whole country got behind it as an effort, it might work if properly executed. But one or a few companies doing it (without the caliber of organizations like Apple) are probably just going to end up with worse financials, and get punished for it by investors.
Remember, the purpose of that money printing is to add money back into the economy while various factors are removing it from the economy. By "economy" I primarily mean the productive part, namely businesses and workers doing work on behalf of a customer.
Somehow the money is not reaching the productive part of the economy. Of course that is changing in 2021, governments finally decided to hand out money directly to those who actually want to spend it and that is a good thing. If it works, then money printing no longer becomes necessary.
With lumber prices where they're at, you'd see mills popping up like oil wells if they had any hope those were permanent increases.
Trends in inflation are just that, trends. So it’s certainly possible to have high inflation for short periods.