BIDEN BOOM: WORKERS SEE BETTER JOBS & WAGES AS INFLATION CONCERNS ABATE

The American Rescue Plan Will Help Boost 2021 Economic Growth to 7%, According to the Federal Reserve

Invesco Economist Kristina Hooper“We don’t have that kind of buying frenzy that creates sustained inflation. To me, this is very, very different than the 1970s.”

Goldman Sachs Economist Jan Hatzius: “Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons.”

The economy is recovering as commodity prices normalize, experts dismiss inflation concerns, and workers see rising wages and better jobs — all thanks to the public investments in the American Rescue Plan.

Here’s what they’re saying: 

New York Times: As Lumber Prices Fall, the Threat of Inflation Loses Its Bite

  • “From sawmills to store shelves to your own hammer swings, lumber can tell you a lot about what’s going on in the economy right now.” 
  • “It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.”
  • […] the lumber market’s behavior is a sign of consumer sanity, said Kristina Hooper, chief global market strategist at the investment management firm Invesco. We don’t have that kind of buying frenzy that creates sustained inflation,” she said. “To me, this is very, very different than the 1970s.”
  • “Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,” said Jan Hatzius, chief economist at Goldman Sachs.”
  • “Average weekly wages in leisure and hospitality, the sector that suffered the steepest job losses in 2020, were up 10.4% in May from February 2020.”
  • “It’s a workers’ labor market right now and increasingly so for blue collar workers,’ said Becky Fankwiewicz, president of staffing firm ManpowerGroup Inc.”
  • “If lower-wage workers can retain the upper hand, it would have little modern precedent, harking back a half-century to when many more of those employees were represented by labor unions.”
Federal Reserve Bank of San Francisco: What’s behind the recent rise in core inflation?
  • The recent sharp increase in measured inflation is unlikely to persist beyond this year. The increase is being driven by spending categories where prices fell the most last spring. Furthermore, much of the surge in the COVID-sensitive component is due to health-care services and used vehicles—categories in which evidence suggests recent price increases will be temporary. 
  • “The remaining COVID-sensitive categories include many products where prices increased likely for temporary reasons. For example, a shift in demand towards low-risk products boosted the prices of products that can be used at home, such as furniture and household appliances (Shapiro 2021). Prices for those types of products are not likely to keep increasing at such a rapid pace as the economy returns to pre-pandemic conditions.”
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