The Complexities of Inflation: Not So Simple

Image Source: Pixabay
 

Lots of chatter of late regarding inflation. Let's go a little wide and deep and see where the bodies are buried.

Here are a few stats on the current state of the US economy courtesy the NY Fed.

Of particular note are the data on core inflation from goods and services (see image below). The impact of the supply chain disruptions is quite evident as is the impact of Covid on consumer spending habits (arrow, spring/summer 2020). Lastly, government support is also quite evident as the rebound in the economy first with goods and then services makes clear.


Where Do We Go From Here?

Armed with this data and a desire to understand the complexities involved in determining the future direction of the US economy and inflation should help provide a better insight into what is likely to unfold. The only advice that I can offer is to resist the urge of instant analysis and go a little wide and a little deep.

As with virtually all matters involving the social sciences, it's the difference between complicated and complex. When it comes to human nature, it's predominantly the latter. When it comes to US economy and inflation, it's predominantly about human nature. An interactive feedback loop with no simple answers.