# Is Stagflation Coming?

Opinion

— April 14, 2021

As seen in: Project Syndicate

![Nouriel Roubini](/sites/default/files/styles/246w/public/assets/images/nroubini.jpg?itok=R6F5VNmo)

By Nouriel Roubini

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There is a growing debate about whether the inflation that will arise over the next few months will be temporary, reflecting the sharp bounce-back from the COVID-19 recession, or persistent, reflecting both demand-pull and cost-push factors.

Several arguments point to a persistent secular increase in inflation, which has remained below most central banks’ annual 2% target for over a decade. The first holds that the United States has enacted excessive fiscal stimulus for an economy that already appears to be recovering faster than expected. The additional $1.9 trillion of spending approved in March came on top of a $3 trillion package last spring and a $900 billion stimulus in December, and a $2 trillion infrastructure bill will soon follow. The US response to the crisis is thus an order of magnitude larger than its response to the 2008 global financial crisis.

The counter-argument is that this stimulus will not trigger lasting inflation, because households will save a large fraction of it to pay down debts. Moreover, investments in infrastructure will increase not just demand but also supply, by expanding the stock of productivity-enhancing public capital. But, of course, even accounting for these dynamics, the bulge of private savings brought by the stimulus implies that there will be some inflationary release of pent-up demand.

Read the full [*Project Syndicate* article](https://www.project-syndicate.org/commentary/stagflation-threat-after-covid19-pandemic-by-nouriel-roubini-2021-04?utm_source=twitter&utm_medium=organic-social&utm_campaign=page-posts-april21&utm_post-type=link&utm_format=16:9&utm_creative=quote-card&utm_post-date=2021-04-14).

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*Nouriel Roubini is a Professor of Economics and International Business and the Robert Stansky Research Faculty Fellow.*

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