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Inflation Falling? Misery Index Expected to Return to Pre-Pandemic Levels by 2023

Bloomberg February 14, 2022 8:01AM “U.S. Inflation Outlook Falls for First Time Since October 2020” by Alex Tanzi


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Summary by 2244







According to the Federal Reserve Bank of New York’s January consumer survey, “U.S. consumers don’t expect red-hot inflation levels to last in the long term.” The median one-year-ahead rate “fell for the first time since October 2020, to 5.8%.” This perspective was “broad-based across age, education and income” and experts believe “that consumers seem to recognize the unusual nature of the current bout of high inflation.”


“Commodity price change expectations all declined in January." Data presented in charts showed that price change expectations for; Rents were about 4% in 2020 rose sharply to around 10% in 2021 where they remain, Medical Care was about 6% in 2020 rose to about 9% and is stable, Food was about 3% in 2020 peaked at about 9% and is stable now at 8%, College Education was about 4% in 2020 rose sharply and reached a peak at about 9% but now stands at 7%, Gas was about 2% in 2020 peaked at about 10% and is now at about 6%, Gold was at about 2% in 2020 rose sharply but has been stable about 5%. Households reportedly are expecting “earnings growth to rise by 3%” versus last year’s 2.6%. “The median three-year ahead inflation expectations decreased” 0.5% to 3.5%.” The 5-10 year metric is 3.1% now versus 2.3% in March 2020.


According to the Labor Department, January 2022 consumer prices “rose 7.5%” versus January 2021 “the biggest increase in decades.” This record uptick has some economists urging the Federal Reserve to raise interest rates by 0.5%. Such an action will eventually have an impact on “misery rate.” The misery rate, “is the sum of inflation and unemployment” was at 5% in 2019, peaked at 15% with the COVID pandemic, settled at about 10% but is forecasted now to fall progressively leading up to the mid-term elections and bottom out to pre pandemic levels of about 5% by 2023.


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