Worries About Inflation Don’t Reflect Realities of Economic Disruption, Says MSU Economist

Michigan State University economist Dr. Lisa D. Cook says rising prices at the grocery store are more complicated than media narratives let on.

The combination of federal stimulus packages issued to jump-start the economy, increasing prices and supply chain shortages have got some people on both sides of the aisle afraid of runaway inflation. Last seen rearing its ugly head in full force when oil prices spiked in the American economy in the 1970s, inflation has been a bogeyman, scaring some of those who want to spend more, heat up the economy and help employ people in the millions.

“I really do think we need to think about what is happening in a different way. I would prefer to call what is happening ‘supply disruptions,’ because this economy is still being run by the pandemic.” –Dr. Lisa D. Cook, Michigan State University

But some economists say the national narratives surrounding inflation and why prices are so high at retail stores right now are missing some important context. With prices in other areas of the economy actually dipping, is “inflation” even the right word for what we’re seeing in the economy right now? Or is this something different — a more complicated result of a deadly pandemic that has caused major economic upheaval? 


Listen: MSU economist Dr. Lisa D. Cook talks about inflation and why prices are so high at the store.


Guest

Lisa D. Cook is a professor of economics and international relations at Michigan State University. She says inflation is real, but that she’s not as concerned about “runaway inflation.”

“I would certainly say we’re seeing inflation. I’m seeing my grocery bill go up just like everyone else,” she says. “[But] the rate of increase has slowed if you take out food and energy, which are the most volatile parts of the consumer price index.”

“But I really do think we need to think about what is happening in a different way,” says Cook. “I would prefer to call what is happening ‘supply disruptions,’ because this economy is still being run by the pandemic.”

Cook notes that the economy was humming before the latest pandemic-related disruption, and she says it’s likely to return to a similar pace once supply chain disruptions are addressed.

“I think this is temporary, but temporary over a longer period. But once the plumbing gets un-stopped, I think the economy should be flowing again as it was before.”

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