![]() The latest inflation reading was a little more than 4% annually. The Fed’s wage growth tracker pegs that number currently at 6%. Here is some good news on the inflation front - wages are finally growing at a rate that is higher than price inflation: ![]() That brings us to the second type of inflation.Ģ. I’m sure everyone would love to see prices go back to 2019 levels but the biggest reason we don’t want to see that scenario is because wages would have to go back to those levels as well to make it happen. ![]() Inflation is basically the lesser of two evils if we’re comparing it to deflation. The last time it happened prior to the GFC was in the 1950s following the Korean War. You can see from the highlighted circles on the CPI chart that the last time we had deflation was during the 2008 financial crisis. Our economy doesn’t work like that anymore which is a good thing. The economy would go from booms that came with ridiculously high inflation to busts that led to massive deflation in prices. In the Great Depression and war years of the early-1900s price volatility was off-the-charts. Just look at the year-over-year percentage changes in the U.S. It was just shallower and less volatile.Īnd even when this period of high inflation is officially behind us it’s not like prices will revert back to their previous levels. There have been plenty of complaints about inflation this decade but it’s not like inflation was nonexistent in the 2010s. Inflation is the kind of economic phenomenon that most people don’t think about a lot until it gets really high or impacts their spending habits. Here are the 3 types of inflation that matter for most people:ġ. ![]() In economics classes in college I learned about cost-push inflation and demand-pull inflation and stagflation and hyperinflation and probably another flation I can’t recall at the moment.īut I don’t want to talk about textbook forms of inflation because that stuff is boring. ![]()
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