Inflation Paradox

Happy New Year gentle readers.  

With the dawn of the New Year unemployment is still below 4 percent, inflation has cooled to 3 percent, third quarter economic growth came in a 5.2% 4.9% (revised a second time) the ratio of job openings to unemployed workers has returned to pre-pandemic levels and wages are growing faster than prices.  All good news as we turn the page on a new calendar.

As supply chains have finally caught-up we've even settled into consumption patterns that are near normal.  (Note: If Iranian-back Houthi rebels step-up harassment of Red Sea shipping; supply chains are gonna get rocked).

All of that aside, what we know for sure is that us boomers are continuing to retire in droves; and as a consequence have created a demographic disturbance in the force.  The millennials and Gen Z population cohorts might not be capable of meeting future labor demands.  So, while we can momentarily bask in the warmth of recent positive economic news, inflation might be a stickler for awhile.  We have to wait and see.

And there is that nagging disconnect between consumer behavior and consumer perception.  So check back Sunday while I take another whack at that piñata.  

 

Fun Factoid:

Declaring it Public Enemy Number One, in 1974 President Gerald Ford mounted a campaign to suppress inflation.  It was called Whip Inflation Now (WIN) and an attempt to spur a grassroots movement to combat inflation by means of encouraging personal savings and disciplined spending habits in combination with 55 presidential vetoes (45 upheld by Congress) saving US taxpayers $9.5 billion.  I'm old enough to remember.