Sometimes the mystery is why something did not happen. The classic statement of this description is in the Arthur Conan Doyle story "Silver Blaze," in which Inspector Gregory asks Sherlock Holmes:
“Is there any point to which you would wish to draw my attention?”
“To the curious incident of the dog in the night-time.”
“The dog did nothing in the night-time.”
“That was the curious incident,” remarked Sherlock Holmes.
When it comes to the US inflation rate, the mystery is that it has moved so little for the last 25 years. The blue line shows the US inflation rate as measured by the Personal Consumption Expenditure price index, leaving out energy and food prices on the ground that they can add short-term volatility that obscures the underlying pattern. If this seems like an odd measure of price inflation--perhaps because the Consumer Price Index is a better-known measure of inflation--I'll just say that it's measure on which the Federal Reserve focuses (for reasons explained here). The red line shows the unemployment rate.
Back in the late 1980s and early 1990s, the inflation rate reached the range of 4-5%. There was a recession (shaded bar) in 1990-91, and you can see the unemployment rate rise while the inflation rate falls. This pattern is standard intro econ wisdom, going under the name of the "Phillips curve:" a tradeoff is expected, at least over the short-run of a few years, because a slowed down recessionary economy will tend to have more unemployment but less inflationary pressure, while an economy in an upswing of economic growth will tend to have lower unemployment but greater inflationary pressures.
Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.