Inflation Finally Starting to Hit Healthy Levels

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It’s finally happened. The PCE measure of price inflation has breached the 2 percent barrier:

Over at the Wall Street Journal, Eric Morath comments: “That is a healthy signal for the economy, showing excess capacity and high unemployment that long held inflation near historically low levels have finally abated. Firmer inflation could give Fed policy makers leeway to consider additional interest-rate increases this year.”

That’s a refreshing change from the usual reaction of “ZOMG! Inflation is nearing 2 percent!” Nonetheless, like a broken record, I’ll point out that (a) core inflation is still under 2 percent and barely increasing at all, and (b) 2 percent is not a “target.” Not in the sense of something you should never exceed, anyway. It’s a target for average inflation, and the average since the end of the Great Recession has been 1.5 percent. More recently, the average over the past two years has been 0.8 percent. It’s going to be a while before we make up for so many years of too-low inflation.

Of course, it’s also true that the Fed’s target probably should be 3-4 percent, but that’s a post for another day.

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Thank you!

We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

The months and years ahead won't be easy. Far from it. But there's no one we'd rather face the big challenges with than you, our committed and passionate readers, and our team of fearless reporters who show up every day.

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