This inflation is driven by strong demand—not kinks in supply chains
If one considers these excess savings alongside the persistence of low interest rates through most of 2021, a rising stock market, pent-up demand, and additional fiscal support, the magnitude of the increase in nominal GDP is not particularly surprising.
Jason Furman MarketWatch 20 April 2022
Jason Furman, a former chair of President Barack Obama’s Council of Economic Advisers, is professor of the practice of economic policy at Harvard University’s John F. Kennedy School of Government and senior fellow at the Peterson Institute for International Economics.
Inflation is, of course, unacceptably high.
Some of this reflects disruptions — supply-chain problems, surging food and energy prices from the war in Ukraine — that are likely to fade away over time.
But inflation, which used to be mainly confined to a few sectors strongly affected by the pandemic, has broadened.
So I find myself in reluctant agreement with economists asserting that the U.S. economy is overheated — that overall demand exceeds productive capacity and that the two need to be brought in line.
The good news is that there’s essentially no evidence that inflation has become entrenched
Paul Krugman NYT 22 April 2022
Opinion | How a Recession Might — and Might Not — Happen - The New York Times (nytimes.com)
Gravitas Plus: The Supply chain crisis
https://englundmacro.blogspot.com/2021/10/gravitas-plus-supply-chain-crisis.html
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