What’s up with inflation?
One of the most fundamental relationships in all of economics — that between the unemployment rate and inflation — appears to be broken.
Historically, these metrics have tended to be inversely correlated. When unemployment was low, inflation was high, and vice versa.
Over the past decade, however, this relationship seems to have broken down.
“If I were (Fed Chair) Janet Yellen, I’d probably be putting on a brave face about it as she is by pointing to cheaper cellphones, drug prices and other special things that will all go away. But I’m not very confident in that explanation,” said Alan Blinder, a former vice chairman of the Fed- eral Reserve and the current vice chairman of the Promontory Interfinancial Network.