, Columnist
The Trade-Off Between Jobs and Inflation Disappears
The Phillips curve said that low unemployment drives up prices. Maybe it was wrong all along.
One more skeptic.
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Earlier this week Representative Alexandria Ocasio-Cortez challenged Federal Reserve Chair Jerome Powell on whether something known as the Phillips curve -- the hypothetical inverse relationship between unemployment and inflation – is “no longer describing what is happening in today’s economy.” In a rare moment of bipartisan agreement, presidential economic adviser Larry Kudlow agreed.
Ocasio-Cortez is probably concerned about wages. Although unemployment is at historic lows, real wage growth has been distinctly underwhelming in recent years: