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Government spending to blame for inflation spike, San Francisco Fed study says
Federal Reserve is ‘answer’ to bringing inflation down: Former Obama economist
Former Obama Economic Council Chairman Jason Furman says Fed Chair Jerome Powell needs to do more to tackle inflation.
Ask Democrats and Republicans what is to blame for high U.S. inflation, and they would point their fingers at extremely different culprits.
While the White House has identified supply-chain bottlenecks and other pandemic-induced disruptions in the economy for the recent price spike, GOP lawmakers have pinned it on the president's massive spending agenda.
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But now researchers at the Federal Reserve Bank of San Francisco are weighing in on the topic – and they say that massive government spending during the coronavirus pandemic has caused U.S. inflation to surge more than in other developed economies.
"Fiscal support measures designed to counteract the severity of the pandemic’s economic effect may have contributed to this divergence by raising inflation about 3 percentage points by the end of 2021," wrote Òscar Jordà, Celeste Liu, Fernanda Nechio and Fabián Rivera-Reyes in the San Francisco Fed's weekly Economic Letter.