Inflation

There’s a smallish but growing chorus of economists and policymakers sounding the alarm about inflation. They warn that a combination of government stimulus and the impending economic snapback will cause prices to overheat. A lot of regular people might be confused by this. After all, the country is still in the middle of the Covid-19 outbreak, the economy is far from back to normal, and we’re still millions of jobs short from where we were pre-pandemic. Many economists and lawmakers have spent months arguing that the risk is doing too little, not too much, to save the economy. Some say a little bit of inflation may be a good thing, especially given how low it’s been in the recent past.

At one level I'm a bit worried about inflation, as external economic disruptions can cause inflation but also America is in a much different place than in the late 1960s. There is no new Interstate system being built now, no major urban renewal projects or college campuses being built. No Vietnam War today.

On the other hand, oil and natural gas production fell dramatically during the pandemic, and suddenly the highways are once again packed bumper to bumper with fuel hungry cars and businesses are once again firing up their lights and cranking up the air conditioning. A significant spike in oil prices into the $200 plus range could certainly spark inflation in some parts of the economy, as could a spike in natural gas prices as the power plants has become very addicted to gas.