It baffles me to hear economists & the Fed discussing inflation w/o even mentioning an infrastructure plan.
A national infrastructure plan will demand what is, inherently, domestic labor.
This will mean “old school” skills as well as new economy skills.
This will also mean huge demand for metals and energy- where there is domestic production stagnation due to political, legal, & social pressures.
A national infrastructure plan would create a monster employer in the form of the federal govt. & its contractors- & any plan would require the govt. & those contractors to have a certain amount of minority employees.
Less labor slack will lead to higher wages, & higher prices, which can “stick” if people are working.
Then there’s China. As China seeks to re-stimulate & as its plan for a consumption-led economy falters, it will use infrastructure projects to fund growth & that will create great demand for commodities.
While an infrastructure plan will be spread over years, it would create sustainable labor demand & it would create inflation expectations, as contractors & companies ramp-up spending to front-run needs & shortages.
As inflation takes hold, there would be little demand destruction w/ the federal govt. as the main customer & employer.
Do I believe we will have sustainable inflation? No … unless …
Congress passes a national infrastructure plan it seems to want … and then- yes …
But remember- not all inflation is bad inflation … just as long as there is not too much of it.