With the U.S.-China trade war intensifying with more and higher tariffs, the question is whether or not price inflation will surge.
President of the Federal Reserve Bank of New York John Williams said that not only will prices increase over the coming year, tariffs will curb economic growth.
“As tariffs get larger, assuming that happens, the effects will be bigger, boosting inflation in the next year and probably having negative effects on growth,” Williams said after an event in Zurich.
“We could probably get a couple tenths or two tenths on the inflation rate over the next year based on what has already been announced. If there (is) further escalation in terms of tariffs, those effects would get even larger.”
Put simply, there could be inflation spikes, which have been common since the end of the Second World War.
That said, Keynesians feel they have been vindicated because there hasn’t been much inflation. This is true if you don’t live under a roof, eat food, or use transportation.
Here is a chart examining inflation over the past decade:
That seems like price inflation, doesn’t it?
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