I agree with all of that save the very last bit, where I'm a bit worried that prices stick despite underlying improvement in supply chain dynamics. Food and energy prices are volatile, as commodities are/can be, but capital goods are less so and in consolidated industries the additional top line all falls to the bottom if manufacturers can keep prices there. I'm also not as sure COVID doesn't llnger around and cause repeated bouts of supply chain disruption. Inflation can be a real bugbear and with a reluctant-to-be-aggressive Fed and all the liquidity poured into the economy by an accommodative monetary policy in the wake of COVID I think I am right to be somewhat fearful.
I understand your concerns, but will push back on a few of them.
Currently, inflation is being forced by transient issues, and where it is being felt by Main Street is in gas prices and food. Both of those swing dramatically. Oil prices are driven by a cartel and the Us has the ability to affect that somewhat, both physically by action, but also by jawboning some of it away. Food prices are being driven by supply chain issues, as evidenced by empty shelves, but this will also return to stability, even if slightly higher than yesterdays prices, because the food industry works off incredibly small margins at the retail level, so supermarkets can only shelve what people will buy. Drive prices too high, no-one buys, shelf space is given up to other goods that do sell.
As has been the case throughout history, though, inflation does drive prices higher, some of them permanently. However, the increasing pace of technology is also dampening those effects across all industries, even as worker productivity has increased massively. Finally, wages have started to improve which, in itself, is inflationary. But, at least those inflationary wages help pay those higher prices.
The American consumer is in a flusher position than at any time since 2008, and this Christmas is expected to be a bumper retail season. Sadly, even the supposedly liberal media is driving the “inflation train” on a daily basis, and almost talking us into a tizzy. Heck, NBC Nightly News just had a piece on about how “expensive” it was going to be for Thanksgiving Dinner this year, because the cost of turkeys was 9¢ (7p) per pound higher than last year! On a friggin 20lb turkey (enough to feed the whole family and then some) that’s under $2…or HALF A STARBUCKS!!! Throw in the extra Pennie’s for a loaf of bread, a sack of spuds and a few tins of cranberry sauce and it could cost an extra 50¢ per person!!! WTAF???
I’m a fairly voracious news junkie, but I honestly feel like the 24/7 news cycle is simply looking for bad news…in a week when the largest American rebuilding program IN HISTORY was passed! So far, we have seen a few seconds of Biden walk across a bridge that is going to get rebuilt, drive a new Hummer EV at GM‘s new Zero Plant, where they’ve switched the line from Chevy Impalas to EVs built on their new Ultium platform. That has all taken place against a backdrop of two murder trials in Wisconsin and Georgia, and the Censure of a Republican in Congress for fantasizing killing AOC and harming President Biden!
I guess “if it bleeds, it leads” is alive and well, even as the economy booms, the stock market bounces off record levels and $1.2T in American spending on American work is about to take place!!!
smh
