In early 2021, an article in the New York Times quoted Fed Chair Jerome Powell as saying that “a robust job market can be sustained without causing an outbreak of inflation.”

a. What did Powell mean by “a robust job market”?

b. The article indicates that Powell’s statement is consistent with a “rethinking” on the part of Fed policymakers. What did the Fed typically expect would happen as a result of a robust job market? What might the experiences of 2019 have contributed to Fed policymakers rethinking this view?

c. Was Powell’s expectation of what was likely to happen to inflation during 2021 correct? Briefly explain.