Fed's Transient Inflation Thesis Facing Numerous Tests as Role of Excess Demand Downplayed

283 Views27 Nov 2021 06:09
  • The Fed's transient inflation thesis hinges on temporary supply dislocations, but hitherto little attention has been paid to the issue of persistent excessive aggregate demand.
  • US industrial production and imports have fully and very quickly recovery from the recession relative to history, thereby casting doubts about a completely inadequate domestic recovery in aggregate supply.
  • Global supply chains struggle to cope with the US recovery due to shortages and strong demand, while pipeline PPI and housing suggest inflation could remain stubbornly high.
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