Slackflation Beckons as Global Growth Goes Off the Boil
Recovery from the Covid downturn has lost its spark, especially in Asia. Accelerating inflation will be here for a while. Let’s hope this convergence can actually be transitory.
Yellen needs to defuse inflation as a political issue.
Photographer: Sarah Silbiger/UPI/Bloomberg
How about a little slackflation? Asia's recovery is losing its footing, with potentially significant consequences. Slowing world growth that's not quite stagnant, combined with a prolonged period of uncomfortably quick price increases, might be with us for a while.
U.S. Treasury Secretary Janet Yellen has linked inflation to controlling Covid-19. Fair enough. Vast amounts of stimulus, a steep drop in activity and a rapid snapback are all features of the pandemic era. But her comments Sunday weren't exactly a ringing endorsement of the thesis that high inflation will be temporary, short-lived, or — in Federal Reserve lingo — transitory. For at least the past year, officials the world over have intoned that we need to live with the coronavirus. Do we need to similarly adapt to high levels of inflation? Yellen and White House economic adviser Brian Deese hit the news show circuit in Washington to try to defuse escalating prices as a political issue with the potential to further complicate passage of President Joe Biden's $1.75 trillion spending plan.