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How bad will the economy get before inflation gets better?

FILE PHOTO: A "Now hiring" sign is displayed on the window of an IN-N-OUT fast food restaurant in Encinitas, California, U.S., May 9, 2022. REUTERS/Mike Blake/File Photo/File Photo

While President Biden has officially declared the COVID-19 pandemic “over,” America now faces a new challenge in the form of an overheating economy and high inflation, and the prospect of a Federal Reserve-induced recession is looming. In the latest Brookings Podcast on Economic Activity, David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy, spoke with Laurence Ball of Johns Hopkins University about his new paper, “Understanding U.S. inflation during the COVID era.” In the study, Ball and his co-authors find that the Fed may need to push unemployment higher than its 4.1% projection to return inflation to the 2% target.

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