Strong labor market is crucial for recovering the economy.

In order to recover the economy damaged by the pandemic, firm labor market needs to be maintained. Unless, unwanted hyperinflation occurs, the Fed would not tighten their monetary policy until the unemployment rate falls pre-pandemic level. However, worries from public indicate that there are some signs of inflation, explained below.

1) Compared to the recession caused by financial crisis in 2008, the recovery will be much faster than then. 

2) Households and companies already have enough cash to spend or expand their business but they are saving it into the asset for later.

However, the Fed chairman insist that it is still way far from strong labor market. He believes providing much support to the economy is less risky than doing too little.

Global Monitor

https://www.globalmonitor.co.kr/view.php?ud=202102110529085201a6a872ef5_41

Fake Inflation

Rising break-even inflation rate, an index of inflation expectation, can be regarded as temporary phenomenon due to the elements such as base effect from pandemic, fake(?) CPI updates from Eurozone, steep backwardation of oil price by cutting supply, surge in freight rates due to lack of container, and rise of U.S. housing rents. However, break-even rate is far from its fundamental value. It can skyrocket as Gamestop and AMC did recently by investors' mere bets. 

기대 인플레이션이 최근 2%를 넘나들고 있다. 글로벌모니터에 따르면 세인트루이스 연준의장 제임스 불라드는 '연준의 새 프레임워크' 평균 인플레이션 목표제가 먹히고 있다고 언급을 하였고 이러한 현상은 언제든 환영이라고 말했다. 이러한 기대 인플레이션 상승은 여러 요소들에 기인하는데 이는 결코 지속 가능하지 않는 단기적인 현상에 머물수도 있다고 한다. 이는 펀더멘털에 의해 움직이는 것이 아닌 오직 투자자의 베팅에 의해서만 좌우되기 때문이다. 

Global Monitor

https://www.globalmonitor.co.kr/view.php?ud=2021020405300331841a6a872ef5_41