Skip to content
Businessweek
Economics

In an Age of Inflation, the Old Recession-Fighting Tools Won’t Work

Politicians’ urge to spend in a slowdown runs headlong into central bank campaigns to cool prices.

relates to In an Age of Inflation, the Old Recession-Fighting Tools Won’t Work
Illustration: Derek Zheng for Bloomberg Businessweek

When economies stall, as they’re threatening to do almost everywhere, politicians typically inject some fiscal support to turn things around. This time it’s going to be complicated.

The pandemic has left governments in the developed world with bigger deficits and debts. But there’s a more pressing problem: high inflation. Covid spending helped cause it, many economists reckon. And with supply chains still snarled, the standard recession-fighting measure of putting more cash into consumers’ pockets risks adding to the already intense price pressures.