The COVID-19 inflation shock was initially seen as a sign of overheating, with many viewing the Federal Reserve as dangerously behind the curve.
But given unprecedented supply chain disruptions, it is increasingly consensus that pandemic-era inflation was largely supply-driven.
Firms’ margins have only begun to normalize, underscoring the long-lasting effects of COVID-19 disruptions.
We expect inflation will keep falling, given the importance of lagged disinflation effects from supply normalization.
Right. The highest corporate profits in more than 70 years have nothing to do with it.
I think when the article says “pandemic-era inflation was largely supply-driven” users are somehow reading “pandemic-era inflation was only supply-driven” and that’s… Well… Not what is being said.
It’s obvious that my point is Brookings is deliberately ignoring the elephant in in the room. They are turning a blind eye to extreme corporate price gouging and record profits, in fact Brookings didn’t mentioned those things at all.
Thinking and critical analysis requires awareness of what is deliberately being omitted by a media source as well as what is being said. It has nothing to do with “somehow reading” the article wrong.
Corporate price gouging has not been a primary driver of U.S. inflation, according to research published on Monday by economists at the Federal Reserve Bank of San Francisco.
While markups for motor vehicles and petroleum products did rise sharply during the 2021-2022 inflation surge, markups across the entire spectrum of U.S. goods and services have been relatively flat during the post-pandemic recovery, the bank’s latest Economic Letter showed.
“As such, rising markups have not been a main driver of the recent surge and subsequent decline in inflation during the current recovery,” wrote the bank’s research chief Sylvain Leduc and colleagues Huiyu Li and Zheng Liu.