Q: All of the spending makes me think that the inflation has to increase. What does it look like right now?

A: Inflation remains lower than the Federal Reserve’s 2% target, using Core Consumer inflation as the measurement. We have yet to see a significant increase in inflation due to COVID-related spending. This may be due to the normal lag between any government action and its effect on the economy. Recessions can also put deflationary pressure on costs (reducing the price of oil for example) and this will reduce the impact of more money entering the financial system.

During the federal government’s response to the financial crisis, inflation did not become a problem despite some predictions of hyper-inflation, also because the crisis reduced the prices of assets (including stocks and housing).

The COVID crisis is different, and inflation may yet be a problem. But it isn’t yet.