Wage-Price Spiral Risks Fueling Runaway Inflation As Workers Demand Raises to Offset High Prices

Massive government spending and loose monetary policy caused high inflation in 2021-2022 after decades of low inflation.

Labor unions are now demanding large wage increases of 7-10% to compensate for high inflation.

Corporations grant these demands to avoid strikes, raising costs and passing higher prices to consumers.

This wage-price spiral escalates inflation further as workers then demand even higher wages.

To stop the wage-price spiral, the government must reduce spending and the Fed must aggressively raise interest rates, even if it risks recession.