“Inflation may linger in the U.S. because of the initial coronavirus assistance programs, researcher finds,” reads the headline of this Market Watch story today. In the United States, inflation — once transitory and now lingering — spiked 6.2 percent over the last year. In the euro zone, consumer prices were up 4.1 percent during that time. In Japan, it was 0.1 percent. Why? According to Hyun-Song Shin, head of research at the Bank for International Settlements, it’s in part because the United States relied on generous unemployment benefits and populist stimulus checks rather than saving existing jobs:
“Preserving the employment relationship appears to have kept the economy on a path where the recovery is closer to bringing the economy to its pre-pandemic state, at least in terms of the Beveridge curve relationship,” said Shin, who previously was an economics professor at Princeton University. The Beveridge curve refers to the relationship between job openings and unemployment.
Surely ramming through a massive reconciliation bill with a slew of dependency programs will do more wonders for the economy.
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