Contrary to early concerns, in 2021 tight labor markets contributed only modestly to US inflation, which was instead fueled initially by price shocks, including soaring commodity prices (triggered in large part by strong demand) and supply shortages. The effects of price shocks are waning, but overheated labor markets persist. As a result, policy actions will be needed to bring labor demand and supply into better balance, write Ben Bernanke and Olivier Blanchard.