Powell Tells Ocasio-Cortez That Inflation-Jobs Link Now a Faint Heartbeat

The video discusses the Federal Reserve's goals of maintaining price stability and maximum employment, highlighting changes in unemployment rate estimates from 2014 to the present. It examines the weakening relationship between unemployment and inflation, questioning the relevance of the Phillips Curve in today's economy. The discussion also covers policy implications, suggesting that inflation expectations are more anchored than before, allowing for potentially more flexible economic policies. Finally, it addresses the role of fiscal policy during severe economic downturns, emphasizing the importance of automatic stabilizers and targeted fiscal measures.

What does the text suggest about the current state of inflation compared to five years ago?

What have economists learned about the natural rate of unemployment in recent years?

What fiscal policy options were suggested in the event of a severe economic downturn?