Chair of Obama’s Council of Economic Advisers Worries that the Huge Covid Stimulus Spending Is Causing “Permanently Higher Inflation”

Jason Furman, quoted below, was the Chair of President Obama’s Council of Economic Advisors. He is now a professor of economics at Harvard.

(p. B1) The United States spent more aggressively to protect its economy from the pandemic than many global peers, a strategy that has helped to foment more rapid inflation — but also a faster economic rebound and brisk job gains.

Now, though, America is grappling with what many economists see as an unsustainable worker shortage that threatens to keep inflation high and may necessitate a firm response by the Federal Reserve. Yet U.S. employment has not recovered as fully as in Europe and some other advanced economies. That reality is prodding some economists to ask: Was America’s spending spree worth it?

. . .

“I’m worried that we traded a temporary growth gain for permanently higher inflation,” said Jason Furman, an economist at Harvard University and a former economic official in the Obama administration. His concern, he said, is that “inflation could stay higher, or the Fed could control it by lowering output in the future.”

For the full story, see:

Jeanna Smialek and Ben Casselman. “Same Relief Goal, Different Costs.” The New York Times (Wednesday, April 27, 2022): B1 & B3.

(Note: ellipsis added.)

(Note: the online version of the story has the date April 25, 2022, and has the title “Rapid Inflation, Lower Employment: How the U.S. Pandemic Response Measures Up.”)

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