![]() ![]() Europe is still a bit behind, but recovery seems to indicate that it’s here to stay, and even Japan is beginning to grow faster. seems to be getting close to a full employment scenario, which will trigger inflation. Last year was a good year-much better than economists expected, and the results are easily shown in stock market prices-but the U.S. How long can the economy stay hot but not overheated? According to central banks, not too long. ![]() This curve describes the inverse relationship between unemployment and inflation, as lower unemployment leads to competition over employees and salaries increase, while higher unemployment means that there is an oversupply of employees, which triggers decreasing salaries, thus lowering inflation. This phenomenon was first described by the economist William Phillips and is known after him as the Phillips Curve. This is a rare state from a historical perspective but also a rare scenario based on economic theory, which, as well as empirical evidence, shows a negative correlation between unemployment and inflation. Inflation is within the range that central banks can handle, and pressure for salary raises is still held in check. Interest rates are increasing at a very moderate pace and not really slowing growth. Growth in 2017 is estimated to be around 3.6% and expected to reach 4% next year. The global economy is growing at a fast pace.
0 Comments
Leave a Reply. |