" So we have now experienced an extraordinary series of shocks if you think about it. The pandemic, the response, the reopening, inflation, followed by the war in Ukraine, followed by shutdowns in China, the war in Ukraine potentially having effects for years here.... You couldn't get this kind of inflation without a change on the supply side, which is there for anybody to see, which is these blockages and shortages and people dropping out of the labor force and things like that."(Federal Reserve Chair Jerome Powell, remarks at news conference on June 15, 2022)

US inflation has recently surged, with annual consumer-price index (CPI) inflation reaching 9% in June 2022, its highest reading since November 1981, as figure 1A shows. Many policy makers have attributed this high and persistent level of inflation to supply-chain pressures related to several unprecedented developments, such as the COVID-19 pandemic and the war in Ukraine, coupled with a very tight labor market as the unemployment rate retreated back to its prepandemic level in less than 3 years (see earlier quote). To illustrate how the post-COVID recovery differs from earlier expansions, figure 1B shows the increase in the core CPI for the past six expansions, starting at the quarter with the peak level of unemployment of the preceding recession. Price growth in the most recent expansion is markedly higher than in the expansions of the 1990s or'00s: 10 quarters after peak unemployment in 2020: Q2, prices have grown by more than 12%, following a trajectory similar to the 1980s expansion rather than the most recent past. In this paper, we examine how supply-chain disruptions and laborsupply constraints have contributed to the recent rise of inflation and