Summary:
When Federal Reserve Chairman Jerome Powell was asked why inflation has been so low since the financial crisis, he stated that a big part of what has been keeping inflation low is the weakness of the economy. "You had a lot of slack and the economy has not been tight," he claims. He believes that there is "global slack" and this worldwide problem is what has affected the tightness of the US labor market. Additionally, Amazon has had an increase in US retail sales. It generated 44% of all US e-commerce last year, as consumers have gravitated towards online sales due to their low prices and wider selections. He also cited currency and energy commodity prices as factors for low inflation.
Questions:
1. Do you agree with Jerome Powell's beliefs on the cause of low inflation?
2. Are there any other factors that you think may have contributed to America's low inflation in the past decade?
Link: https://www.cnbc.com/2018/03/01/new-fed-chairman-says-amazon-helped-keep-inflation-low.html
1 comment:
I am confused by this predicament. I thought keeping inflation low was a good thing. But Powell is saying that inflation is low because the market is weak? And then Amazon's success is partly what caused the economy to be weak? And what does "global slack" mean? I think this train of thought may be an oversimplification of what Powell may actually mean. However, it is remarkable that Amazon has such a chunk of the US e-commerce market. There are so many sites that sell goods online, yet many consumers choose to purchase from Amazon. Is it concerning that Amazon has such a large chunk of the market? And are they deterring other companies from entering the market, even though it is a pretty easy market to enter?
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