I haven’t been paying as much attention as usual to inflation indicators. But we’ve been getting a string of good news.
One source of inflation pessimism was the high ratio of job openings to unemployed workers. That issue has now gone away, with unemployment still very low 1/
Underlying inflation is also low. I like the New York Fed’s measure, in large part because it’s an algorithm that doesn’t involve judgement calls and hence possible motivated reasoning. It’s within spitting distance of the 2 percent target 2/
Finally, for those concerned inflation might get entrenched in expectations, the Atlanta Fed’s measure of business expectations is also within spitting distance of 2 percent. Hard to see anything here that justifies concerns about “sticky” inflation or a difficult “last mile” 3/
At this point the question is not the last mile, but the last inch. Are they going to create a recession to get that last inch, especially since we're probably better off settling at least an inch higher.
