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Labor Participation & Inflation

Hi Cullen,

Is part of the reason the Federal Bank Reserve can not meet its 2% inflation goal is because there has been for two decades a decling labor force partipation (as evidenced by the FRED chart below); meaning that there are plenty of bodies available for work, therefore a low incentive to increase wages and prices?


Hi @hugo.

Honestly, I am not sure why inflation has been so low. Yes, the high levels of unemployment contribute to it. But it also seems more structural than that. Things like demographics, technology, etc are playing a big role as well.


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