last year drops out of the calculation. the marked rise in food prices over the past 12 months has also pushed up the headline measures of price inflation. for many other categories of consumer goods, high order backlogs and tight supplies of key production inputs — like lumber and semiconductors — as well as logjams at the nation ’ s ports and a shortage of truck drivers are likely to push up prices over the next several months. but i expect that these pricing pressures will be temporary, easing over the course of this year as supply bottlenecks are gradually resolved. beyond this year, some observers have expressed concern that a rapid recovery in aggregate demand amid substantial fiscal support and accommodative monetary policy could lead to undesirably high inflation. while i expect that the stronger economy will push up inflation somewhat, let me explain why i do not expect pricing pressures to be excessive and why i believe the federal reserve is likely to continue supporting the economy for some time through accommodative monetary policy. here i will point to what has in the past seemed to be a relationship between inflation and unemployment, known as the phillips curve. over the past several decades, despite large swings in unemployment, inflation has been extremely stable. as an example, up to the beginning of the pandemic, when the economy was growing and unemployment was at a 50 year low of 3. 5 percent, inflation was still very low and stable. economists often attribute this so - called flat phillips curve to the fact that individuals ’ inflation expectations are well anchored and unlikely to respond to short - term pricing movements. survey data on long - run inflation expectations tend to back up this idea. they have been remarkably stable over the past decade, and, although they declined moderately during the middle of last year, most measures have edged up again in recent months and now stand roughly at the levels observed during the pre - pandemic period. with all of that said, given our lack of historical experience with both this level of substantial fiscal stimulus and highly accommodative monetary policy, my outlook for inflation is fairly uncertain. when making monetary policy decisions, we would be concerned about a significant increase in inflation above our 2 percent goal that was sustained for some time. but as my fed colleagues and i have said many times, monetary policy is not on a preset course. i will continue to monitor economic developments carefully, and, if my outlook for inflation were to change materially, my assessment of the appropriate

alan greenspan : technological innovation and the us economy remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the white house conference on the new economy, washington, d. c., held on 5 april 2000. * * * it has become increasingly difficult to deny that something profoundly different from the typical postwar business cycle has emerged in recent years. not only has the expansion reached record length, but it has done so with far stronger - than - expected economic growth. most remarkably, inflation has remained subdued in the face of labor markets tighter than any we have experienced in a generation. while there are various competing explanations for an economy that is in many respects without precedent in our annals, the most compelling appears to be the extraordinary surge in technological innovation that developed through the latter decades of the last century. in the early 1990s, with little advance notice, those innovations began to offer sharply higher prospective returns on investment than had prevailed in earlier decades. the first sign of the shift was the sharp rise in capital investment orders, especially for high - tech equipment, in 1993. this was unusual for a cyclical expansion because it occurred a full two years after the trough of the 1991 recession. by 1995, the investment boom had gathered momentum, suggesting that earlier expectations of elevated profitability had not been disappointed. in that year, with inflation falling, domestic operating profit margins started to rise, indicating that increases in unit costs were slowing. these developments signaled that productivity growth was probably beginning to move higher, even though official data, hobbled by statistical problems, failed to provide any confirmation. now, five years later, there can be little doubt that not only has productivity growth picked up from its rather tepid pace during the preceding quarter century but that the growth rate has continued to rise, with scant evidence that it is about to crest. the acceleration of productivity stemming from the investment boom has held cost increases in check. despite the surge in demand, unit labor costs over the past year have barely budged, and pricing power has remained well contained. apparently, firms hesitate to raise prices for fear that their competitors will be able to wrest market share from them by employing new investments to produce at lower costs. indeed, the increasing availability of labor - saving equipment and software, at declining relative prices and with improving delivery lead times, is arguably at the root of the loss of business pricing power in recent years. to be sure, marked increases in available global capacity and the