Q&A: US inflation will not fall back to 2% in the future

Woody Brock  |  SED  |  05 October 2022

Inflation will not fall back to the 2% level that the US Federal Reserve wants, and that we had pre-Covid. Two underlying structural changes that have nothing to do with today’s shortage-based inflation will keep US inflation at about 4% in the future:

  1. The long-overdue rise in the cost of labour; and,
  2. A permanent doubling of the size of the US fiscal deficit as a percentage of GDP.
    But the news is not all bad. The IT-based technology revolution is continuing, and as we have argued for at least 10 years, this revolution has been the most important reason why inflation has been droppin...

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