In late 1969, with U.S. unemployment at 3.5%, consumer prices were rising at aro...
SAN FRANCISCO - In late 1969, with U.S. unemployment at 3.5%, consumer prices were rising at around 6%, and inflation on some items like clothing and housing were running even hotter.
And overall, U.S. prices as measured by the consumer price index are rising at a staid annual pace of 2%. By the Federal Reserve’s preferred measure, inflation is a meager 1.6%.For now, the absence of price pressures lets Fed policymakers keep interest rates on hold to nurse economic growth without fear of unleashing runaway inflation.
“We wonder why, with unemployment so low, the inflation hasn’t come up to our target in a sustainable way,” San Francisco Federal Reserve Bank President Mary Daly said in Dallas last month. “You are not going to be an effective policymaker in my judgment unless you figure out what’s getting in between those models.”They include sharp but onetime price drops for cell phone plans and clothing; an aging U.S.
“One of the things that I think about a lot is, to what extent are these structural changes happening in such a way that the old historic relationships and the old historical models are not telling us enough? They don’t map onto how the economy and the world is actually working,” Atlanta Fed President Raphael Bostic said last month.
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