Stevenson insists not to be afraid of inflation

July 29, 2021 Marketplace

With inflation running higher than it ever has in a decade, some Americans are worried about the effects it could have on the economy. But Betsey Stevenson, professor of public policy and economics, says not to worry.

"People think that inflation erodes their purchasing power,” she said. “On average, it doesn’t because on average it raises wages as much as it raises costs.”

She explained how inflation could even be good for some.

“Borrowers tend to be younger people in a lot of debt get helped by inflation. If inflation goes up — higher than what people were expecting — well then, what you end up paying back to the bank is actually less, in terms of purchasing power,” Stevenson said.