The One Chart That Tells Us If We’re Seeing Runaway Inflation

The dreaded Phillips curve describes the runaway inflation of the 60s and 70s. The situation is very different today.

Anyone who has been following the U.S. monthly economic data lately has noticed that the rate of inflation has been rising over the past year as the unemployment rate has fallen. Here are the numbers:

To those old enough to remember, this chart looks ominously like the first inflationary surge of the Kennedy-Johnson years:

Or even more ominously, Figure 1 looks a bit like this chart from a 1958 article by A. W. Phillips, which later became famous as the “Phillips curve.”

So, are we in for runaway inflation unless we slam on the brakes and send unemployment soaring again…