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    Why Critics Fear the Fed's Policy Shift May Prove Late and Abrupt

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    The Federal Reserve is still buying bonds as prices surge. Some praise the central bank’s continuing policy pivot; others ask if it was fast enough.The Federal Reserve has moved at warp speed by central banking standards over the past six months as it prepares to lean against a surge in prices: first slowing its economy-stoking bond purchases, then deciding to end that buying program earlier and finally signaling that interest rate increases are coming.Some on Wall Street and in Washington are questioning whether it moved rapidly enough.Consumer prices increased by 7 percent in December from the prior year, the fastest pace since 1982, as rapid spending on goods collides with limited supply as a result of shuttered factories and backlogged ports. While price increases were initially expected to fade quickly, they have instead lasted and broadened to rents and restaurant meals.The Fed is charged with maintaining full employment and stable prices. The burst in inflation is causing some to question whether the central bank was too slow to recognize how persistent price increases were becoming, and whether it will be forced to respond so rapidly that it pushes markets into a free fall and the economy into a sharp slowdown or even recession.“The first policy mistake was completely misunderstanding inflation,” said Mohamed El-Erian, the chief economic adviser at the financial services company Allianz. He thinks the Fed now runs the risk of having to pull support away so rapidly that it disrupts markets and the economy. The Fed’s Board of Governors “maintained its transitory inflation narrative for 2021 way too long, missing window after window to slowly ease its foot off the stimulus accelerator.”Plenty of economists disagree with Mr. El-Erian, pointing out that the Fed reacted swiftly as it realized that conditions did not match its expectations. And market forecasts for inflation have remained under control, suggesting that investors believe that the Fed will manage to stabilize prices over the long run. Even so, stocks are shuddering and consumers are watching nervously as the central bank prepares for what could an unusually rapid withdraw of monetary support — ramping up pressure on its policymakers.“The downturn was faster, the upturn was faster: It was an unprecedented event, so not forecasting it properly was not the end of the world,” said Gennadiy Goldberg, a senior U.S. rates strategist at TD Securities. “What matters is what their readjustment is once the forecast has changed.”Jerome H. Powell, the Fed chair, and his colleagues meet this week in Washington and will release their latest policy decision at 2 p.m. on Wednesday.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.The Fed is on track to end its asset buying program in March, at which point markets expect policymakers to begin raising interest rates. Investors expect officials to raise interest rates as many as four times this year, while allowing their balance sheet of asset holdings to shrink. Both policy changes would work together to remove juice from the rapidly recovering economy.The path the Fed is now following differs starkly from the one it was projecting as recently as September, when many Fed officials had not come around to the idea that rates would rise in 2022. Likewise, the Fed began tapering off its bond buying program only in late 2021, so it is now in the uncomfortable position of making its final purchases — giving markets and the economy an added lift — even as inflation comes in hot.The central bank’s critics argue that it should have started to withdraw its help earlier and faster. That would have begun to cool off demand and inflation sooner, and it would allow for a more gradual drawdown of support now.“I don’t think the Fed caused this inflation problem, but I do think they were late to recognize it,” said Aneta Markowska, chief financial economist at Jefferies, an investment bank. “And, therefore, they will have to catch up very quickly.”Sudden Fed moves carry an economic risk: Failing to give markets time to digest and adjust often sends them into tumult. Rocky markets can make it hard for households and businesses to borrow money, causing the economy to slow sharply, and perhaps more than the central bank intended.That is why the Fed typically tries to engineer what policymakers often refer to as a “soft landing.” The goal is to avoid upending markets, and to allow the economy to decelerate without slowing it down so abruptly that it tips into recession.But the economy has surprised the central bank lately.In 2021, Fed policymakers bet that rapid inflation would fade as the economy got through an unusual reopening period and the pandemic abated. They wanted to be patient in removing support as the labor market healed, and they did not meaningfully change their plans for policy after Democrats took the White House and Senate and it became clear that they would pass a large stimulus package.The path the Fed is now following differs starkly from the one it was projecting as recently as September.Stefani Reynolds for The New York TimesAs those dollars trickled out into the economy and the pandemic persisted, though, demand remained strong, supply chains remained roiled, and inflation began to broaden out from pandemic-disrupted products like cars and airfares into rents, which move slowly and matter a lot to overall price increases. Workers returned to the job market more slowly than many economists expected, and wages began to pick up sharply as labor shortages surfaced.That caused the Fed to change course late last year — and to do so fairly abruptly.“Inflation really popped up in the late spring last year, and we had a view — it was very, very widely held in the forecasting community — that this would be temporary,” Mr. Powell said in December. But officials grew more concerned as employment cost data moved higher and inflation indicators showed hot readings, he said, so they pivoted on policy.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy

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    The White House is emphasizing that inflation is worldwide. Economists say that’s true — but stimulus-spurred consumer buying is also to blame.The price increases bedeviling consumers, businesses and policymakers worldwide have prompted a heated debate in Washington about how much of today’s rapid inflation is a result of policy choices in the United States and how much stems from global factors tied to the pandemic, like snarled supply chains.At a moment when stubbornly rapid price gains are weighing on consumer confidence and creating a political liability for President Biden, White House officials have repeatedly blamed international forces for high inflation, including factory shutdowns in Asia and overtaxed shipping routes that are causing shortages and pushing up prices everywhere. The officials increasingly cite high inflation in places including the euro area, where prices are climbing at the fastest pace on record, as a sign that the world is experiencing a shared moment of price pain, deflecting the blame away from U.S. policy.But a chorus of economists point to government policies as a big part of the reason U.S. inflation is at a 40-year high. While they agree that prices are rising as a result of shutdowns and supply chain woes, they say that America’s decision to flood the economy with stimulus money helped to send consumer spending into overdrive, exacerbating those global trends.The world’s trade machine is producing, shipping and delivering more goods to American consumers than it ever has, as people flush with cash buy couches, cars and home office equipment, but supply chains just haven’t been able to keep up with that supercharged demand.Kristin J. Forbes, an economist at the Massachusetts Institute for Technology, said that “more than half of the increase, at least, is due to global factors.” But “there is also a domestic demand component that is important,” she said.The White House has tried to address inflation by boosting supply — announcing measures to unclog ports and trying to ramp up domestic manufacturing, all of which take time. But rising inflation has already imperiled Mr. Biden’s ability to pass a sprawling social policy and climate bill over fears that more spending could add to inflation. Senator Joe Manchin III, the West Virginia Democrat whose vote is critical to getting the legislation passed, has cited rising prices as one reason he won’t support the bill.The demand side of today’s price increases may prove easier for policymakers to address. The Federal Reserve is preparing to raise interest rates to make borrowing more expensive, slowing spending down, in a recipe that could help to tame inflation. Fading government help for households may also naturally bring down demand and soften price pressures.Inflation has accelerated sharply in the United States, with the Consumer Price Index climbing by 7 percent in the year through December, its fastest pace since 1982. But in recent months, it has also moved up sharply across many countries, a fact administration officials have emphasized.“The inflation has everything to do with the supply chain,” President Biden said during a news conference on Wednesday. “While there are differences country by country, this is a global phenomenon and driven by these global issues,” Jen Psaki, the White House press secretary, said after the latest inflation data were released.It is the case that supply disruptions are leading to higher inflation in many places, including in large developing economies like India and Brazil and in developed ones like the euro area. Data released in the United Kingdom and in Canada on Wednesday showed prices accelerating at their fastest rate in 30 years in both countries. Inflation in the eurozone, which is measured differently from how the U.S. calculates it, climbed to an annual rate of 5 percent in December, according to an initial estimate by the European Union statistics office.“The U.S. is hardly an island amidst this storm of supply disruptions and rising demand, especially for goods and commodities,” said Eswar Prasad, a professor of trade policy at Cornell University and a senior fellow at the Brookings Institution.But some economists point out that even as inflation proves pervasive around the globe, it has been more pronounced in America than elsewhere.“The United States has had much more inflation than almost any other advanced economy in the world,” said Jason Furman, an economist at Harvard University and former Obama administration economic adviser, who used comparable methodologies to look across areas and concluded that U.S. price increases have been consistently faster.The difference, he said, comes because “the United States’ stimulus is in a category of its own.”White House officials have argued that differences in “core” inflation — which excludes food and fuel — have been small between the United States and other major economies over the past six months. And the gaps all but disappear if you strip out car prices, which are up sharply and have a bigger impact in the United States, where consumers buy more automobiles. (Mr. Furman argued that people who didn’t buy cars would have spent their money on something else and that simply eliminating them from the U.S. consumption basket is not fair.)Administration officials have also noted that the United States has seen a robust rebound in economic growth. The International Monetary Fund said in October that it expected U.S. output to climb by 6 percent in 2021 and 5.2 percent in 2022, compared with 5 percent growth last year in the euro area and 4.3 percent growth projected for this year.“To the extent that we got more heat, we got a lot more growth for it,” said Jared Bernstein, a member of the White House Council of Economic Advisers.While many nations spent heavily to protect their economies from coronavirus fallout — in some places enough to push up demand, and potentially inflation — the United States approved about $5 trillion in spending in 2020 and 2021. That outstripped the response in other major economies as a share of the nation’s output, according to data compiled by the International Monetary Fund.Many economists supported protecting workers and businesses early in the pandemic, but some took issue with the size of the $1.9 trillion package last March under the Biden administration. They argued that sending households another round of stimulus, including $1,400 checks, further fueled demand when the economy was already healing.Consumer spending seemed to react: Retail sales, for instance, jumped after the checks went out.Americans found themselves with a lot of money in the bank, and as they spent that money on goods, demand collided with a global supply chain that was too fragile to catch up.Jutharat Pinyodoonyachet for The New York TimesAdam Posen, president of the Peterson Institute for International Economics, said the U.S. government spent too much in too short a time in the first half of 2021.“If there had not been the bottlenecks and labor market shortages, it might not have mattered as much. But it did,” he said.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Stock Markets Off to Worst Start Since 2016 as Fed Fights Inflation

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    Stocks are off to their worst start of a year since 2016 as the central bank pulls back the enormous stimulus programs it began in the early months of the pandemic.After falling for a fourth day in a row on Friday, the stock market suffered its worst week in nearly two years, and so far in January the S&P 500 is off to its worst start since 2016. Technology stocks have been hit especially hard, with the Nasdaq Composite Index dropping more than 10 percent from its most recent high, which qualifies as a correction in Wall Street talk.That’s not all. The bond market is also in disarray, with rates rising sharply and bond prices, which move in the opposite direction, falling. Inflation is red hot, and supply chain disruptions continue.Until now, the markets looked past such issues during the pandemic, which brought big increases in the value of all kinds of assets.Yet a crucial factor has changed, which gives some market watchers reason to worry that the recent decline may be consequential. That element is the Federal Reserve.As the worst economic ravages of the pandemic appear to be waning, at least for now, the Fed is ushering in a return to higher interest rates. It is also beginning to withdraw some of the other forms of support that have kept stocks flying since it intervened to save desperately wounded financial markets back in early 2020.This could be a good thing if it beats back inflation without derailing the economic recovery. But removing this support also inevitably cools the markets as investors move money around, searching for assets that perform better when interest rates are high.“The Fed’s policies basically got the current bull market started,” said Edward Yardeni, an independent Wall Street economist. “I don’t think they are going to end it all now, but the environment is changing and the Fed is responsible for a lot of this.”The central bank is tightening monetary policy partly because it has worked. It helped stimulate economic growth by holding short-term interest rates near zero and pumping trillions of dollars into the economy.This flood of easy money also contributed to the rapid rise in prices of commodities, like food and energy, and financial assets, like stocks, bonds, homes and even cryptocurrency.What happens next comes from an established playbook. As William McChesney Martin, a former Fed chairman, said in 1955, the central bank finds itself acting as the adult in the room, “who has ordered the punch bowl removed just when the party was really warming up.”The mood of the markets shifted on Jan. 5, Mr. Yardeni said, when Fed officials released the minutes of their December policymaking meeting, revealing that they were on the verge of embracing a much tighter monetary policy. A week later, new data showed inflation climbing to its highest level in 40 years.Putting the two together, it seemed, the Fed would have no choice but to react to curb rapidly rising prices. Stocks began a disorderly decline.Financial markets now expect the Fed to raise its key interest rate at least three times this year and to start to shrink its balance sheet as soon as this spring. It has reduced the level of its bond buying already. Fed policymakers will meet next week to decide on their next steps, and market strategists will be watching.Low interest rates made certain sectors especially appealing, foremost among them tech stocks. The S&P 500 information technology sector, which includes Apple and Microsoft, has risen 54 percent on an annualized basis since the market’s pandemic-induced trough in March 2020. One reason for this is that low interest rates amplify the value of the expected future returns of growth-oriented companies like these. If rates rise, this calculus can change abruptly.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Biden Will Nominate Three New Fed Officials

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    The nominees would bring more diverse leadership to the Fed, which has struggled to expand its ranks.President Biden plans to nominate three new Federal Reserve officials as he seeks to remake the central bank at a critical economic moment, a White House official familiar with the matter said on Thursday.If confirmed, his picks would result in the most diverse Fed board in the institution’s history.The White House plans to nominate Lisa Cook, an economist at Michigan State University who has researched racial disparities and labor markets, and Philip Jefferson, an economist and administrator at Davidson College, to open seats on the Fed’s Board of Governors. Both Ms. Cook and Mr. Jefferson are Black.Mr. Biden will also nominate Sarah Bloom Raskin to serve as the Fed’s vice chair for supervision, a job created to help police the nation’s largest banks after the 2008 financial crisis.Mr. Biden had previously nominated Jerome H. Powell for a second stint as Fed chair and Lael Brainard, now a governor, as vice chair of the central bank. If they are confirmed to their posts, the seven-person Fed board would have four women, one Black man and two white men — the most diverse team in the Fed’s roughly 108 years of existence.The administration had promised to make the Fed — historically dominated by white men — look more like the public it served, and prominent lawmakers have pushed for a focus on tougher financial regulation. The picks seek to deliver along those dimensions.“The headline is, and should be, about diversity,” said Kaleb Nygaard, a senior research associate at the Yale Program on Financial Stability who studies the Fed, explaining that personnel choices are a big moment for Mr. Biden. “This is the biggest chance he’s got to send a message about what he wants the Fed to be focused on.”Ms. Raskin, who served as a Fed governor during the Obama administration, has a track record of arguing for more forceful bank oversight and would be likely to usher in an era of stricter rules for the titans of global finance, a priority of some powerful congressional Democrats.If confirmed, Ms. Raskin would be in charge of determining the need for new financial regulations, enacting existing rules and running large and globally important banks through their annual health checks, which are commonly called stress tests.Ms. Raskin would succeed Randal K. Quarles, who was appointed by former President Donald J. Trump and had criticized some of the rules that were imposed on banks after the 2008 financial crisis. As vice chair, Mr. Quarles instituted a number of adjustments to regulation and supervision that made oversight less onerous for banks, and that critics argued weakened financial rules.Mr. Quarles’s term as vice chair expired in October, and he left the Fed at the end of December.Ms. Raskin, a Harvard-trained lawyer who studied economics as an undergraduate at Amherst College, has spent time in the private sector. She is a former deputy secretary at the Treasury Department, where she focused on financial system cybersecurity, among other issues. She also spent several years as Maryland’s commissioner of financial regulation. Ms. Raskin is married to Representative Jamie Raskin, a Maryland Democrat.If confirmed, Ms. Raskin will face a number of pressing issues. The vice chair for supervision serves as the Fed’s chief connection with banks and markets, a role that will take on more prominence as the central bank considers whether to issue a digital currency. The vice chair will have to navigate new technologies, like stablecoins and cryptocurrencies, and assess what those mean for banks.The Fed is developing climate-risk scenarios to judge banks’ exposure, something the vice chair for supervision will be highly involved in. And the person will need to work with other regulators at the Financial Stability Oversight Council — an interagency group focused on guarding against systemic financial risks — to deal with weaknesses in money market funds and other financial instruments that the pandemic laid bare.Mr. Biden’s other picks for the Fed would also enter their jobs at a challenging juncture, as unemployment falls swiftly and inflation remains high, but millions of former workers are still missing from jobs.The Fed is contemplating how quickly to react by removing support from the economy, and all governors hold a constant vote on monetary policy, giving the new picks a potential say in the matter.Dr. Cook — who would be the first Black woman ever to sit on the Fed’s board — is well known for her work in trying to improve diversity in economics, including through the American Economic Association Summer Program, which helps to prepare undergraduates for potential careers in the field.She attended Spelman College and the University of Oxford and earned a doctorate in economics from the University of California, Berkeley. She was an economist on the White House Council of Economic Advisers under President Barack Obama.She has not said much publicly about her monetary policy philosophy, though she has spoken favorably about keeping the Fed independent from politics. Her published work examines a wide range of topics: her doctoral thesis focused on credit markets in tsarist and post-Soviet Russia, while some of the work she is most famous for looked into mortality and race, and segregation and lynching.Dr. Cook is an academic focused on macroeconomics, but “she is not a traditional one — she has looked at what we get wrong, sometimes, in the economy,” Julia Coronado, founder of the research firm MacroPolicy Perspectives, said in an interview before the pick was announced. “She is somebody who can hold her own, I think, in that room.”Mr. Jefferson has worked as a research economist at the Fed board, and studied at the University of Virginia and Vassar College. He has written about the economics of poverty, and his research has delved into whether monetary policy that stokes investment with low interest rates helps or hurts less-educated workers.“My findings suggest that opportunities start to open up for them as the labor market gets tight,” he said in an interview with the Minneapolis Fed in 2018.He has also spoken candidly about his experience as a minority in economics.“In graduate school at the University of Virginia, I was the only African American in the program the entire time there,” he said in that 2018 interview, noting that that had followed him into his professional appointments. “It has been a long, lonely road professionally.”And he said economics needed more diverse voices.“We need to be sitting around the table,” he said. “I think it is crucially important for public policy that we hear voices that represent diversity.”With the new slate of candidates, what is arguably the top policymaking body in global economics will become much more varied in both race and gender.There were briefly three women on the board in the early 1990s, and again in the 2010s. The Fed has had three Black board members in its history, all men, and none of them sat on the board contemporaneously.It is unclear how the reworked board might alter debate over current monetary policy, which could involve sticky choices about how quickly to slow an economy struggling with rapid price increases. The Fed has signaled it is prepared to raise interest rates, which could choke off inflation but also slow the job market and wage growth.Mr. Powell, the Fed chair, emphasized this week that achieving full employment — a goal that the Fed has emphasized in recent years as a way to foster inclusion and opportunity across the economy — depended on maintaining price stability.“If inflation does become too persistent, if these high levels of inflation get entrenched in our economy, and in people’s thinking, then inevitably that will lead to much tighter monetary policy from us, and it could lead to a recession, and that would be bad for workers,” Mr. Powell said while testifying before lawmakers on Tuesday. More

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    Lael Brainard predicts that the Fed will engineer a soft economic landing.

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    Lael Brainard, a Federal Reserve governor whom President Biden has nominated to be the central bank’s new vice chair, said the Fed would communicate its plans for removing economic support clearly — and suggested that the job market would continue to grow even as the Fed pulled back its help and as inflation began to ease.Ms. Brainard faced vetting before the Senate Banking Committee on Thursday. She fielded questions about her qualifications and her views on the Fed’s role in preparing the financial system for climate change and the outlook for the United States economy.In a hearing marked by limited contention — one that suggested Ms. Brainard could enjoy some bipartisan support — the nominee expressed a willingness to combat high and rising prices by removing Fed help for the economy. The central bank is already slowing its bond-buying program, and it has signaled that it could soon raise interest rates and begin to shrink its asset holdings in a bid to further cool off the economy.“I believe we’ll be able to see inflation coming back down to target while the employment picture continues to clear,” Ms. Brainard said, after noting that the Fed would communicate its plans for withdrawing support clearly. “There are some short-term constraints there that I think are limiting people from coming back into the labor market. As those are lifted, I think we’ll have continued gains.”The jobless rate has been plummeting, but millions of workers are still missing from the job market compared with before the pandemic, and many employers complain that they cannot find employees, suggesting that health concerns and other challenges are keeping many people on the sidelines for now. At the same time, price inflation is rapid, with a report on Wednesday showing that a key price index rose in December at the fastest pace since 1982.Ms. Brainard acknowledged that pandemic imbalances that have roiled global shipping and shut down factories are part of what is driving high inflation today — and that the Fed’s policies can do little to fix those supply problems. But she highlighted that Fed policies that affect borrowing costs can have a significant impact in cooling off demand.“We have a set of tools — they are very effective — and we will use them to bring inflation back down,” Ms. Brainard said.Fed officials have increasingly signaled that they expect to raise interest rates in 2022 to keep high inflation from becoming permanent. Markets increasingly expect four rate increases in 2022, which would put the Fed’s short-term policy interest rate just above 1 percent. More

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    Lael Brainard, Nominee for Fed Vice Chair, Calls Inflation ‘Too High’

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    Lael Brainard, a Federal Reserve governor whom President Biden has nominated to be the central bank’s new vice chair, plans to tell lawmakers that the central bank will use its policies to wrestle inflation under control when she testifies at her confirmation hearing.Ms. Brainard, who will face vetting before the Senate Banking Committee at 10 a.m. on Thursday, is likely to garner considerable support among Democrats and may pick up some Republican votes, though how many are unclear at this point.Her nomination — and her new role at the Fed if the Senate confirms her — comes at a challenging economic moment. While unemployment is falling rapidly, inflation has taken off, with a report on Wednesday showing that a key price index rose in December at the fastest pace since 1982.“We are seeing the strongest rebound in growth and decline in unemployment of any recovery in the past five decades,” Ms. Brainard will say, according to her prepared remarks. “But inflation is too high, and working people around the country are concerned about how far their paychecks will go.”Ms. Brainard will also tell lawmakers that the Fed’s policies are “focused on getting inflation back down to 2 percent while sustaining a recovery that includes everyone,” calling that the central bank’s “most important task.”After nearly two years of propping up a virus-stricken economy by keeping interest rates at rock bottom and buying government-backed debt, Fed officials began to slow their large bond purchases late last year. That program is on track to end in March. Officials have signaled in recent weeks that they also expect to lift interest rates to make borrowing more expensive, slowing demand and helping to cool the economy.Markets increasingly expect four rate increases in 2022, which would put the Fed’s short-term policy interest rate just above 1 percent.“Today the economy is making welcome progress, but the pandemic continues to pose challenges,” Ms. Brainard will say. “Our priority is to protect the gains we have made and support a full recovery.”Ms. Brainard has been at the Fed since 2014, spanning the Obama, Trump and Biden administrations. Before that, she was a top international official at the Treasury Department. An economist and a Democrat, she had been seen as a potential contender to be Treasury secretary or Fed chair during the Biden administration.She has a good working relationship with Jerome H. Powell, the Fed chair, whom Mr. Biden has renominated for a second term. She will use her prepared statement to emphasize that she has worked for many administrations in Washington — Democrats and Republicans alike — while pledging to take the Fed’s mission to fight inflation and its independence from partisan wrangling seriously.“I will bring a considered and independent voice to our deliberations,” she will say. More

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    CPI Report Is Expected to Show Inflation Popped Again

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    Inflation closed out 2021 on a high note, bad news for the Biden White House and for economic policymakers, as rapid price gains erode consumer confidence and cast a shadow of uncertainty over the economy’s future.The Consumer Price Index most likely climbed 7 percent in the year through December, and 5.4 percent after volatile prices such as food and fuel are stripped out, economists in a Bloomberg survey estimated. The last time the main inflation index eclipsed 7 percent was 1982.What to Know About Inflation in the U.S.Inflation, Explained: What is inflation, why is it up and whom does it hurt? We answered some common questions.The Fed’s Pivot: Jerome Powell’s abrupt change of course moved the central bank into inflation-fighting mode.Fastest Inflation in Decades: The Consumer Price Index rose 6.8 percent in November from a year earlier, its sharpest increase since 1982.Why Washington Is Worried: Policymakers are acknowledging that price increases have been proving more persistent than expected.The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.Policymakers have spent months waiting for inflation to fade, hoping that supply chains would catch up with booming consumer demand. Instead, continued waves of coronavirus infections have locked down factories, and shipping routes have struggled to work through extended backlogs as consumers continue to buy goods from overseas at a rapid clip. What happens next may be the biggest economic policy question of 2022.Inflation F.A.Q.Card 1 of 6What is inflation? More