Supply-Side Challenges Nudging the U.S. Economy Toward Stagflation

Despite nine million job vacancies, the U. S. unemployment rate continues to decline, standing at 5.8 percent in May of 2021, well below the high of 14.8 percent in April 2020. The initial recovery was triggered by aggressive monetary policy followed by massive fiscal stimulus. Until the pandemic, the U. S. economy relied heavily on ‘helicopter money’ or Modern Monetary Theory. The infusion of liquidity through the credit market and multiple fiscal stimulus packages has been rapid and massive, which, given the lockdown restrictions, exceeds the spending power of millions of people.