Inflation Problem Remains Unlicked

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From the Wall Street Journal:

After being given up for dead, inflation is gradually coming back to life.

It’s not roaring back. Indeed, it’s still below the 2% level the Federal Reserve targets, one reason the Fed is almost certain to leave interest rates unchanged when it meets this week.

….The behavior of inflation-protected bonds suggests that in early July, investors expected U.S. inflation to average 1.4% over the coming decade. As of Friday, that had risen to 1.7%. That is still below the Fed’s 2% target, evidence that investors remain unconvinced the Fed has licked the low-inflation problem.

The “low-inflation” problem! That’s totally accurate, but did you imagine you’d ever see the Wall Street Journal discussing the problem of inflation being too damn low? For those of us of a certain age, it feels like an alternate universe.

Anyway, the primary inflation measure used by the Fed is the trimmed mean PCE rate. Here it is. It’s been going up steadily but very slowly for the past few years, but it’s still pretty low and there’s not even a hint of acceleration yet.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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