Inflation could be poised for a comeback.
Some economists are starting to embrace the idea that a prospective Covid-19 vaccine could allow people to once again spend money on travel, restaurants and other services—and drive up prices in the U.S.
That would be a change from the past 10 years, when inflation rarely hit the Federal Reserve’s 2% target despite a strong economy and low unemployment. It would also test the central bank’s new framework, which calls for periods of inflation above that level after stretches, like the current one, when it has run below.
The economy’s progress since the sharp, pandemic-induced recession in the spring has made forecasters more confident of a strong recovery once a vaccine enables people to resume their pre-pandemic lives.
