Fed’s Daly says globalization is a key reason why inflation is so low


By Greg Robb, Senior Economics Reporter / March 26, 2019 / MarketWatch


With the unemployment rate so low, why is inflation so muted? Globalization, at least in part, is the answer, said San Francisco Fed President Mary Daly on Tuesday.

Daly said that both workers and businesses are finding it hard to set prices in the new global marketplace.

...workers have suffered from a loss of bargaining power...

“Declining unionization — along with increased automation and globalization — have made it harder for workers to push for higher pay, even in very healthy job markets"

...many firms have lost pricing power amid global competition...

“This means they have a harder time passing along rising costs, such as wages, to final goods prices."



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