stagnant business activity, together with an increasing unemployment rate -- described the new economic malaise.
Inflation seemed to feed on itself. People began to expect continuous increases in the price of goods, so they
bought more. This increased demand pushed up prices, leading to demands for higher wages, which pushed prices
higher still in a continuing upward spiral. Labor contracts increasingly came to include automatic cost-of-living
clauses, and the government began to peg some payments, such as those for Social Security, to the Consumer Price
Index, the best-known gauge of inflation. While these practices helped workers and retirees cope with inflation,
they perpetuated inflation.
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