The 1990’s Weren’t a Terrible Decade… Maybe We Aren’t Facing an Inflationary (or Deflationary) Bust? Just Sayin’

Two Fed Charts to ponder.  Does today’s data rhyme with the…

  • …(cue scary music here) terrible horrible 70’s when inflationary blight stalked the land?
  • …(cue “I want my MTV…”) the 1990’s ?   The 1990’s were a pretty good decade.

Today’s data kinda maybe rhyme with the 90’s?:

  • inflation running at 3%-4% (or 4%-5% depending on the data series) and trending down.  10 Year inflation expectations are now at… 1.8%.
  • Low unemployment.  Strong wage growth.
  • Solid GDP growth.
  • anticipating major technology-led growth (Cloud and AI)

OK, inflation isn’t at the Fed’s (arbitrary) 2% target.  But expectations are pointing us that way.  We also weren’t at 2% in the 1990’s either.  Was that so horrible?

Not making a prediction here.  But worth giving the non-doom scenario some thought…

1981 to 2004 – PCE Inflation, Unemployment, and GDP growth Rates.  Inflation trending down.

1960 to present:  The doomsayers have been arguing we are replaying 1965-1970.  But what if we’re in 1983 or 1989?  OR 1996?  Inflation expectations are well-anchored.  The supply shocks that drove inflation are (mostly) fading.

Also re-posting a link to my last piece here – a pasted chart in my last e-mail went out as a string of gobbledyook.  Here’s the (hopefully) Wclean version.

Where’s the Wage-Price Spiral in This Chart? Maybe a Price-Wage Spiral? Or Just Not Much Linkage At All…

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