Inflation hit a four-decade high last month. Meanwhile, unemployment remains at historic lows. More than three-quarters of the largest U.S. companies have reported higher revenue than before Covid-19. Yet, supply chain problems mean people might not be able to find the basics to make holiday treats this year.

These mixed messages have created a divide between the many Americans who feel jittery about the state of the economy, and the Biden administration’s claims of a strong economic recovery.

Now, in an acknowledgment of the threat of inflation, the Federal Reserve has weighed in with promises to hike interest rates in order to combat the higher prices hitting Americans’ pocket books.

Greg Ip is chief economics commentator at the Wall Street Journal. Diane talked to him Friday to understand the risks posed by inflation, how rising prices affect the overall economy and what can be done to address Americans’ economic worries.