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Alan W. Dowd is a Senior Fellow with the American Security Council Foundation, where he writes on the full range of topics relating to national defense, foreign policy and international security. Dowd’s commentaries and essays have appeared in Policy Review, Parameters, Military Officer, The American Legion Magazine, The Journal of Diplomacy and International Relations, The Claremont Review of Books, World Politics Review, The Wall Street Journal Europe, The Jerusalem Post, The Financial Times Deutschland, The Washington Times, The Baltimore Sun, The Washington Examiner, The Detroit News, The Sacramento Bee, The Vancouver Sun, The National Post, The Landing Zone, Current, The World & I, The American Enterprise, Fraser Forum, American Outlook, The American and the online editions of Weekly Standard, National Review and American Interest. Beyond his work in opinion journalism, Dowd has served as an adjunct professor and university lecturer; congressional aide; and administrator, researcher and writer at leading think tanks, including the Hudson Institute, Sagamore Institute and Fraser Institute. An award-winning writer, Dowd has been interviewed by Fox News Channel, Cox News Service, The Washington Times, The National Post, the Australian Broadcasting Corporation and numerous radio programs across North America. In addition, his work has been quoted by and/or reprinted in The Guardian, CBS News, BBC News and the Council on Foreign Relations. Dowd holds degrees from Butler University and Indiana University. Follow him at twitter.com/alanwdowd.

ASCF News

Scott Tilley is a Senior Fellow at the American Security Council Foundation, where he writes the “Technical Power” column, focusing on the societal and national security implications of advanced technology in cybersecurity, space, and foreign relations.

He is an emeritus professor at the Florida Institute of Technology. Previously, he was with the University of California, Riverside, Carnegie Mellon University’s Software Engineering Institute, and IBM. His research and teaching were in the areas of computer science, software & systems engineering, educational technology, the design of communication, and business information systems.

He is president and founder of the Center for Technology & Society, president and co-founder of Big Data Florida, past president of INCOSE Space Coast, and a Space Coast Writers’ Guild Fellow.

He has authored over 150 academic papers and has published 28 books (technical and non-technical), most recently Systems Analysis & Design (Cengage, 2020), SPACE (Anthology Alliance, 2019), and Technical Justice (CTS Press, 2019). He wrote the “Technology Today” column for FLORIDA TODAY from 2010 to 2018.

He is a popular public speaker, having delivered numerous keynote presentations and “Tech Talks” for a general audience. Recent examples include the role of big data in the space program, a four-part series on machine learning, and a four-part series on fake news.

He holds a Ph.D. in computer science from the University of Victoria (1995).

Contact him at stilley@cts.today.

Soaring Inflation Mostly Caused by Stimulus-Fueled Demand: Study

Wednesday, August 24, 2022

Categories: ASCF News Economic Security

Comments: 0

Source: https://www.theepochtimes.com/soaring-inflation-mostly-caused-by-stimulus-fueled-demand-study_4685898.html

(Dreamstime)

The pandemic-era inflationary wave that has swelled into a persistent cost-of-living crisis for many Americans was driven mostly by a stimulus-fueled demand surge, though supply-side bottlenecks made the problem worse, a team of economists said in a recent study.

Julian di Giovanni, an economist at the Federal Reserve Bank of New York and co-author of the study (pdf), summarized the team’s findings in a blog post on Aug. 24 that comes amid an ongoing debate as to what caused inflation to soar to multi-decade highs.

Di Giovanni said that demand-side factors were primarily responsible for inflation in the United States between 2019 and 2021, accounting for 60 percent of the inflationary crunch that continues to erode Americans’ purchasing power.

Changes in household spending patterns had a negligible impact on prices, while supply-side factors accounted for the remaining 40 percent of inflation, which di Giovanni characterized as “very elevated.”

Inflation, as measured by the Consumer Price Index (CPI), has risen sharply and steadily since pandemic-era lockdowns were lifted, from an annualized 2.7 percent in March 2021 to a recent peak of 9 percent in June 2022, according to data from the Bureau of Labor Statistics.

‘Very Expansionary Fiscal and Monetary Policy’
There has been fierce debate around what factors led prices to accelerate at their fastest pace in decades, with some—including many members of the Biden administration—chiefly blaming supply-side constraints, while others—including many Republicans—pointing the finger at unprecedented levels of fiscal and monetary spending.

Heated discussions also have occurred around the persistence of inflation, with initial takes that it would be transitory giving way to the view that it’s become far stickier and more difficult to quell.

While supply-side constraints like labor shortages and supply chain bottlenecks have pushed inflation higher, di Giovanni said these were “made worse by the push arising from increased demand caused by very expansionary fiscal and monetary policy.”

The model that underpins the study calculated that CPI inflation between 2019 and 2021 was an annualized 9.18 percent, with the actual observed inflation over the same period coming in at 8.47 percent, confirming the accuracy of the model-calibrated rate, di Giovanni said.

“Our work shows that inflation in the United States would have been 6 percent instead of 9 percent at the end of 2021 without supply bottlenecks,” he said, adding that it’s possible that the continued easing of supply-side constraints will lead to a “substantial” drop in inflation over the near term.

Fed Pivot?
Di Giovanni’s elaboration on the team’s research comes just days ahead of a much-anticipated meeting of policymakers at the Kansas City Federal Reserve’s annual monetary policy symposium in Jackson Hole, Wyoming.

Last year at around the same time, Fed Chair Jerome Powell insisted that the inflationary jump would likely be “transitory,” a prediction he later acknowledged was wrong.

The Fed has since embarked on an aggressive tightening cycle to ease inflationary pressures, which have shown some signs of abating, along with mounting signals of economic weakness.

In the face of softer economic data, including two back-to-back quarters of negative GDP growth that constitutes a common rule-of-thumb definition of a recession, market expectations have risen for a Fed rate hike pause—or even a cut.

While there are some signals that the Fed might opt for a slower pace of rate increases than the 75 basis-point pace at its last two policy meetings, analysts say Powell might use his speech at Jackson Hole to temper expectations for monetary easing, given the persistence of inflationary pressures.

“Powell will likely attempt to stress a slower pace of hikes, but also a longer period of time in restrictive territory, taking a little wind out of the sail for the dovish pivot narrative,” Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions, told Reuters.

The so-called core PCE [Personal Consumption Expenditures] price index, which is widely considered the main benchmark by which the Fed measures the pace of inflation against its 2 percent target, rose from an annual 4.7 percent in May to 4.8 percent in June, the latest month of available data.

With core PCE running at more than twice the Fed’s target, and with analysts expecting July’s PCE data to show inflationary pressures edging down negligibly, to 4.7 percent in July, when the data is released this Friday, the Fed’s fight against inflation could well be drawn out.

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