Monday, April 30, 2018

US Annual Inflation measures jump as Consumer Spending Rises

https://www.cnbc.com/2018/04/30/us-personal-income-march-2018.html

This article talks about inflation and the relationship to consumer spending. The Fed has been trying to get inflation up to its 2% target mark, but there has been some trouble recently. However, it is good that inflation is currently on the rise and that consumer spending is positively correlated with that. As we know, consumer spending is important as it adds to GDP and output.

It is interesting to think about the differences in inflation in a capitalist economy, like the US, and a more socialist economy. In a capitalist economy, consumer spending is very important because people have the ability to earn income, and have the freedom to choose what to do with it. In a socialist economy, people don't really have the ability to earn excess income, and if they do, they tend to have little freedom to do what they want with it. I would expect those socialist countries to have lower inflation, however, we have seen the US have low inflation which makes me wonder why?

Why do you think inflation has been weak in the US recently?