This is planet money from NPR.
Inflation, for a lot of us, might just feel like prices going up on us, right?
But there is something that, like, kicks off inflation that gets the inflation train going.
Economists say it is too much demand chasing too little supply, too much money, not enough things to buy.
But something else can make inflation stick around.
If you think of the 1970s, which was the last time the United States had really high sustained inflation, a big concern was rising wages.
Yeah.
Prices for goods and services were high, and workers maybe expecting prices to be even higher next year, asked for pay raises to, like, keep up.
But then companies had to just raise their prices more to cover the new labor costs.
And then workers asked for raises again, and it all, like, spiraled out of.
Control, which is why it is appropriately called the wage price spiral.
It's a pretty good name.
Pretty darn good name.
And when inflation started getting bad in 2021, economists in the US Federal Reserve worried that wage increases would be a big problem.
There was the same concern in Europe, in Germany, the UK, the head of the UK central bank actually said last year that workers should restrain themselves from asking for big wage increases because inflation could get, quote, out of control.
But it seems like a 1970s style wage price spiral hasn't happened, not in Europe, not in the US.
Janet Yellen, the us treasury secretary, just said this year that a wage price spiral is, quote, I not happening.
In fact, wages, on average, haven't really been keeping up with inflation, at least until recently.
So if wages haven't been the big problem, what has been keeping inflation going?
Hello, and welcome to planet money.