We were just talking about that.
The master plan to reinvigorate the economy apparently does include some inflation.
I'm wondering what evidence Powell has to support his expectation of inflation. Maybe he's thinking what I'm thinking?
Or maybe he sees inflation in the inflation data?
That one line that goes high during covid, that's "Unit Labor Cost". The others are measures of inflation; they show gradual downtrend since mid-2018.
Unit Labor Cost jumped when covid became a reality. Okay, that makes sense. And maybe that's what Powell is looking at. But the inflation measures don't show it. Not yet. "This summer," according to one news report. "Temporary," says another, so the Fed is "unlikely to raise interest rates."
The central bank will be "patient" and give inflation a chance to get going.
Sounds like part of the master plan to me.
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RE: That last graph, where Unit Labor Cost jumps suddenly with the covid recession
This may be relevant, and is interesting in any case:
At the FRED Blog: What happened to the median wage in 2020?
Looking at a median-weekly-wage graph: "See the spike in 2020? Does this huge increase mean everyone got a huge raise? No, it does not. As we’ll try to show in this post, the so-called composition effect is misleading us..."
The composition effect is that "group averages can mask true individual experiences."
Then: "The second and third graphs show us where that composition effect kicks in: After losing more low-wage jobs than high-wage jobs, the median wage had to go up. Remember: With a median, in this case median wage, half the jobs are above and half are below. If you remove more jobs from the bottom half than the top half, the median wage will rise."
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