AL-93 · Selected Studies — Economics

Phillips Curve Explorer

The Phillips Curve proposed a stable trade-off: lower unemployment causes higher inflation. The 1970s broke it. The 2020s complicated it further. This explorer plots the empirical U.S. data as an interactive scatter — toggle decades to see when the relationship held, when it inverted, and what stagflation looks like in data space.

📊 BLS CPI + unemployment annual data 1960–2024 (embedded); values are approximate annual averages from public US government sources
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Toggle Decades
Original Curve (Phillips 1958)
A.W. Phillips found a stable inverse relationship between wage inflation and unemployment in UK data 1861–1957. Samuelson and Solow extended this to price inflation and U.S. data. The implication: policymakers could choose a point on the curve — accept higher inflation for lower unemployment, or accept higher unemployment to reduce inflation. A menu of policy choices.
The Stagflation Breakdown (1970s)
The 1973 OPEC oil shock produced supply-side inflation that coexisted with rising unemployment — the "impossible" stagflation. Friedman and Phelps had predicted this in 1968: the curve was only stable in the short run. The expectations-augmented Phillips Curve: workers and firms incorporate expected inflation into wages, shifting the curve. There is no stable long-run trade-off. The long-run curve is vertical at the Natural Rate of Unemployment (NAIRU).
The Flat Curve + 2021–22 Surge
2010–2019: unemployment fell from 10% to 3.5% while inflation stayed near 2%. The curve appeared flat or dead — globalization, anchored expectations, and Amazon-era competition suppressed prices even as labor tightened. Then 2021–22: supply disruptions + $5T in fiscal/monetary stimulus produced inflation not seen since 1981. The curve wasn't dead — it was dormant. Unanchored expectations + aggregate demand shock reactivated it violently.
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