As an undergraduate student of economics, I have had one persistent question about the rise in commodity prices: could it help employment?
Modern models of the economy clearly show that modest changes in the prices of goods can cause large shifts in the behavior of consumers. Over the past year the world economy has seen large increases in the relative price of commodities to labor. As US industrial price indexes reach record levels and domestic wages stagnate, US labor becomes relatively cheaper. Even if increases in the price of food/energy harm the average working family, shouldn't these increases brighten the prospects of the unemployed?
Am I right?
P.S. I'm not talking about any sort of "constructive fiscal contraction" increasing employment in the US, I'm only wondering how increasing commodity prices could increase unemployment when we are already so far below capacity.