Quoted: At the beginning of the pandemic, the rate of inflation was almost zero and prices were falling, said Dr. Menzie Chinn, an economics professor at the UW-Madison La Follette School of Public Affairs.
In response, the government passed robust support packages — including stimulus checks, enhances unemployment benefits and tax cuts — to boost spending. The spending those programs created was concentrated more on goods than services, Chinn said.
“We have kind of a weird time where people have shifted more towards buying goods and we get a lot of our goods from China and abroad,” Chinn said. “So that means you have this collision, at least in the goods sector, of enhanced demand and not quite enough supply to keep up. And what happens is prices go up. Supply and demand.”