Why Inflation Can Be a Self-Fulfilling Prophecy


Inflation and as chair pal gang get ready for the two day sitdown that starts tomorrow. They've got some new data to chew on the new york. Fed is out with a survey today that says consumers are expecting inflation above the fed's target which is remembered two percent over the next couple of years by way of reminder. We learned last week than inflation on an annual basis was at five percent last month in an admittedly bizarro economy. Nevertheless what consumers believe can actually affect things marketplace's. Nancy marshall genzer gets us. Going consumers told the new york fed. They're expecting inflation to hit four percent a year from now. That's the highest reading. Since the new york fed survey began back in two thousand thirteen consumers over age sixty and those with a high school degree or less were more likely to predict higher inflation. They might be unfixed incomes tracking prices closely. Andrew is a former fed economist. Now at dartmouth and comparing here well. This toothpaste is ten cents cheaper than that one. Let's buy it today. We'll try and see if if if it tastes okay. Stephen cicchetti economist at brandeis university says there's expect prices to go up. They start asking their bosses for a raise. The employers raise wages of their workers that increases costs cost increases caused them to have to wait. Raise their prices causing inflation. Economists call this a wage price spiral it was a thing in the nineteen seventies former dallas fed advisor danielle de martino booth worries that another problem from the seventies could reemerge where rising prices for basic necessities cause consumers to limit spending on luxuries. That means that you're going to cut out going out to eat which you just finally got to start doing again. In many places in america de martino booth says when those consumers cut back on spending economic growth slows she says if these ghosts of the seventy s. Come back to haunt us. That will really complicate life for the fed as it tries to keep the economy from overheating or

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