Economists Regis Barnichon and Adam Shapiro find that recent inflation dynamics can be at least partially explained by patterns of excess demand in the economy. In this Economic Letter video, Adam discusses how specific measurements of labor market tightness are among the strongest gauges of excess demand for forecasting inflation.
Watch the Economic Letter Video: How Much Has the Cooling Economy Reduced Inflation?
The Federal Reserve Bank of San Francisco (SF Fed) works to advance the nation’s monetary, financial, and payment systems to build a stronger economy for all Americans. As part of the U.S. central bank, the SF Fed serves the Twelfth Federal Reserve District, which covers the nine western states—Alaska, Arizona, California, Hawai’i, Idaho, Nevada, Oregon, Utah, and Washington—plus American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. By pursuing our two key goals of maximum employment and price stability—known as the Fed’s dual mandate—we work toward supporting an economy that works for everyone.