Monday, October 23, 2017

This is the biggest mystery in the U.S. economy

This article discusses how the inflation rates in the United States are hardly topping 2%. This might seem like a good thing on the surface, but that is not the case. In a healthy economy unemployment typically falls while income and prices rise. The Federal Reserve admits that they don't have an explanation for the low inflation rates. Low inflation rates like this could be an indication that  deflation is to come. "Technology, globalization, low oil prices, a lack of job skills in demand, the decline of labor unions and workers' productivity all contribute to low inflation to varying degrees". It will be interesting to see if the Federal Reserve finds an answer as to why inflation rates are so low. If they determine why inflation rates are behaving the way they are, I wonder what kind of policies will be implemented to correct the low inflation rates.

1 comment:

  1. There were lots of disasters and tragic accidents recently, and they may be the reasons why the inflation rate is not meeting the standards the US wants. But this is just an assumption. If the FED has no answer, they may have to put more effort in finding the cause and try to ameliorate the situation.

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