3 ms·

Month-on-month inflation was 0.6% last month, with much of the economy still closed (which should be deflationary). That’s a 7.5% annualized rate.

spekcular 5y ago
Sure, I agree that if the trend continues for a year, then we should start being concerned. But inflation has been below 2% since December 2018, and interest rates are at zero (which gives the Fed considerable latitude for implementing inflation control). The panic here seems a bit premature to me.
- omalleyt 5y ago
  Here’s the personal savings rate: https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT And here’s the money velocity: https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V When the economy actually reopens and people start spending again, prices will go boom.
  - spekcular 5y ago
    To clarify, the claim I object to is that inflation is currently, at the present moment, "running rampant." I agree that if the Fed does not handle things carefully then there may be problems in the future.
  - throw0101a 5y ago
    > When the economy actually reopens and people start spending again, prices will go boom. Yes, this has actually been predicted. See also 2010-11: > Then came a few months when inflation seemed to be rising after all. Consumer price inflation reached almost 4 percent; wholesale inflation went into double digits; the average price of commodities like oil and soybeans rose almost 40 percent in a year. Soon Republicans were haranguing Ben Bernanke, the Fed chairman, suggesting that his efforts might “debase the currency.” > But the Fed stayed its course, arguing correctly that rising prices were a temporary blip, not a harbinger of ’70s-style stagflation. Inflation soon subsided, and it has stayed low ever since. […] > So what’s going to happen in the months ahead? We’ll probably see a number of transitory price increases, not just because the economy is booming, but also because the lingering effects of the pandemic have produced some unusual disruptions — for example, a global shortage of shipping containers. > The question will be whether these price increases are a 2010-2011-type blip or something more dangerous. Smart observers will look past the headlines to measures of underlying inflation — not just the Fed’s standard “core” measure but things like the Atlanta Fed’s sticky price index as well. * https://www.nytimes.com/2021/03/22/opinion/us-inflation-stimulus.html https://www.nytimes.com/2021/03/22/opinion/us-inflation-stim... * https://archive.is/Vxj5h https://archive.is/Vxj5h We heard the same thing about printing money during the QE years. Still waiting for inflation after ~10 years.

spekcular 5y ago

Sure, I agree that if the trend continues for a year, then we should start being concerned. But inflation has been below 2% since December 2018, and interest rates are at zero (which gives the Fed considerable latitude for implementing inflation control). The panic here seems a bit premature to me.

omalleyt 5y ago
Here’s the personal savings rate: https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT And here’s the money velocity: https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V When the economy actually reopens and people start spending again, prices will go boom.
- spekcular 5y ago
  To clarify, the claim I object to is that inflation is currently, at the present moment, "running rampant." I agree that if the Fed does not handle things carefully then there may be problems in the future.
- throw0101a 5y ago
  > When the economy actually reopens and people start spending again, prices will go boom. Yes, this has actually been predicted. See also 2010-11: > Then came a few months when inflation seemed to be rising after all. Consumer price inflation reached almost 4 percent; wholesale inflation went into double digits; the average price of commodities like oil and soybeans rose almost 40 percent in a year. Soon Republicans were haranguing Ben Bernanke, the Fed chairman, suggesting that his efforts might “debase the currency.” > But the Fed stayed its course, arguing correctly that rising prices were a temporary blip, not a harbinger of ’70s-style stagflation. Inflation soon subsided, and it has stayed low ever since. […] > So what’s going to happen in the months ahead? We’ll probably see a number of transitory price increases, not just because the economy is booming, but also because the lingering effects of the pandemic have produced some unusual disruptions — for example, a global shortage of shipping containers. > The question will be whether these price increases are a 2010-2011-type blip or something more dangerous. Smart observers will look past the headlines to measures of underlying inflation — not just the Fed’s standard “core” measure but things like the Atlanta Fed’s sticky price index as well. * https://www.nytimes.com/2021/03/22/opinion/us-inflation-stimulus.html https://www.nytimes.com/2021/03/22/opinion/us-inflation-stim... * https://archive.is/Vxj5h https://archive.is/Vxj5h We heard the same thing about printing money during the QE years. Still waiting for inflation after ~10 years.