Chairman & CEO of Sage Policy Group, Inc., Anirban Basu is one of the Mid-Atlantic region’s leading economic consultants. He provides strategic analytical services to government agencies, law firms, nonprofits and medical systems, among others.
Dr. Basu has taught at several universities, most frequently at Johns Hopkins University. He is the Distinguished Economist in Residence at Goucher College and holds four graduate degrees, including a JD and a PhD.
During Dr. Basu’s presentation, guests had questions about economics, particularly inflation. See the answers to their questions below:
Q: “I’d like to hear more about the real world impact of government spending on inflation rates. Much of the political discourse in the Midterm elections focused on that but there are so many other factors.”
A: Many factors have driven excess inflation. We talked about a few during the webinar — money supply increases, ultra-low interest rates, supply chain disruptions, and rapid economic recovery. Another factor was massive federal stimulus packages. For some reason, though there were massive packages passed during the end of the Trump administration and at the onset of the Biden administration, there are some who claim that President Biden is the primary inflationary culprit. Obviously, many voters disagreed during the midterms.
Q: “I’m not sure I understand how low unemployment causes higher inflation or makes it harder to recover so a bit more of an explanation on that would be helpful. Thanks.”
A: When unemployment is low, competition for workers between employers is more intense. That drives wages up farther and faster. That’s inflationary. By weakening the labor market, there are more workers available per job opening, which produces less rapid wage increases and lower inflation all things being equal.