Inflation and the Profit-Price Spiral Image

Inflation and the Profit-Price Spiral

12 May 2023 - 26 mins
Podcast Series Planet Money

Economists say that inflation is just too much money chasing too few goods.

But something else can make inflation stick around.

If you think of the 1970s, the last time the U.S. had really high sustained inflation, a big concern was rising wages. Prices for goods and services were high. Workers expected prices to be even higher next year, so they asked for pay raises to keep up. But then companies had to raise their prices more. And then workers asked for raises again. This the so-called wage-price spiral.

So when prices started getting high again in 2021, economists and the U.S. Federal Reserve again worried that wage increases would become a big problem. But, it seems like the wage-pric...

26 mins

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