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Fiscal Stimulus Caused Only 1% of the 8% Rise in U.S. Inflation

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  • Laurence Seidman

Abstract

Was the 8% rise in U.S. inflation in 2021–2022 mainly caused by 2021 fiscal stimulus? This article presents evidence that 5% of the 8% rise in U.S. and European inflation was caused by two cost pushes: severe supply chain disruptions from covid and a huge rise in the cost of oil. Two percent was caused by higher wage increases to try to keep up with the 5% cost-push. One percent in Europe was caused by a natural gas price spike. U.S. fiscal stimulus in 2021 was the same as in 2020. Only 1% of the U.S.’s 8% rise was caused by 2021 fiscal stimulus.

Suggested Citation

  • Laurence Seidman, 2023. "Fiscal Stimulus Caused Only 1% of the 8% Rise in U.S. Inflation," Challenge, Taylor & Francis Journals, vol. 66(5-6), pages 169-187, November.
    • Handle: RePEc:mes:challe:v:66:y:2023:i:5-6:p:169-187
    DOI: 10.1080/05775132.2023.2278348
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