Price increases would have eased without the Fed’s tightening, which we will soon see was overkill.
What you're not hearing about the big lie of "sticky inflation"
Monday, July 31, 2023
Words matter. Flexible inflation isn't flexible. It is leading. Sticky inflation isn't sticky. It is lagging.
Update to Strategic View
The words "sticky inflation" are blinding investors and policy-marers to the true progress on disinflation and the prospect of deflation. Sticky inflation embodied in core services ex-shelter is no stickier than flexible inflation embodied in goods, although it is less volatile. The key dynamic is that core services ex-shelter lags, while goods lead. Goods bottomed first in the pandemic depression, re-attained target first, and peaked first. Core services ex-housing lagged in all cases, and remains about four to six months behind goods. Goods are in outright deflation. As core services ex-shelter catches up, overall CPI will fall below the Fed's target and into deflation.