Where is the inflation people keep talking about?

The Phillips curve states that as unemployment goes down, inflation goes up. But this simplistic theory does not always work. We saw periods in the 1970’s, for example, when inflation was high, and so was unemployment; but today’s environment does not reflect that era’s circumstances. Instead, we have had many years of job growth, to the point where unemployment rate is roughly 5 percent, but inflation has not really gone up at all. Unfortunately, we may not be seeing a dramatic increase in inflation, but there are many reasons why the Phillips curve or correlation to inflation does not seem to be working...

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