There’s a brief piece on inflation via WSJ that I almost liked a lot but kind of failed toward the end. The piece basically said, inflation need not be a worry as long as the unemployment rate remains high. A couple of points raised:
- When work is plentiful, employees can demand higher wages and benefits, forcing employers to boost prices of the goods and services they sell to make up the difference.
- A rule of thumb is that inflation doesn’t become sticky until the unemployment rate dips below 5%.
Then this part got me: inflation shouldn’t pose a problem in the near-term. Well, I don’t think anyone is worried about it in the short-term. For as long as the economy remains weak and unemployment rising, which would go on until 2010, then inflation should not be a concern.
Read it HERE.