The pandemic-era inflationary wave that has swelled into a persistent cost-of-living crisis for many Americans was driven mostly by a stimulus-fueled demand surge, though supply-side bottlenecks made the problem worse, a team of economists said in a recent study.
Julian di Giovanni, an economist at the Federal Reserve Bank of New York and co-author of the study (pdf), summarized the team’s findings in a blog post on Aug. 24 that comes amid an ongoing debate as to what caused inflation to soar to multi-decade highs.
Di Giovanni said that demand-side factors were primarily responsible for inflation in the United States between 2019 and 2021, accounting for 60 percent of the inflationary crunch that continues to erode Americans’ purchasing power….