Is inflation more out of control than ever? Are we heading into a recession no matter what? Is it the end of the world as we know it?
The answers to those questions, by any reasonable person’s lights, are no, no and no.
But that doesn’t mean there won’t be plenty of folks who’ll be freaking out about another bad inflation report. Because freaking out is easy to do, especially by folks who are prone to see, and to forecast, doom and gloom at pretty much every turn.
Wednesday’s consumer price index reading from the Labor Department was no one’s idea of swell news. For the 12 months ended in June, inflation stood at 9.1%.
One not unreasonable reaction: Yikes!
That said, it’s possible, even likely, that we have reached peak inflation and are already on the other side. The price of gasoline at the pump has been dropping, but that wasn’t reflected in Wednesday’s report, as the data for that survey were from before the price cuts. Lower fuel costs can be expected to filter down through the greater economy, but not today.
There’s no question that a great many people underestimated how steep and persistent would be the current run-up in inflation. We must number ourselves among those who hadn’t imagined that things would get so bad so quickly.
But they did. And no one can pretend otherwise.
Still, just because a good many folks were wrong does not in any way mean that the inflation doomsayers are right on the money. To hear their talk of a return to 1970s-style stagflation, one sometimes senses that they are rooting as much as they are forecasting.
No one, no matter their political views, should be hoping for a long period of entrenched double-digit inflation. And we are unlikely to get it, thankfully.
It’s likely that the Federal Reserve will boost the short-term interest rate it controls by another 0.75 percentage point at its next meeting late this month. That, on the heels of a rate bump of that same level last month, would demonstrate clearly that our nation’s central bankers are on the job.
Since the coming of the coronavirus pandemic 28 months back, the economy has taken hit after hit. Maybe, just maybe, we are at long last about to turn the corner.