Frankly, I am convinced the OP was motivated more by partisan hopes than real understanding. He was mistaken about the stock market, the banks and the effect of Fed action in raising short-term rates (and initiating a mild QT policy by allowing assets — mostly government securities — it bought on the open market during QE to roll off its books. Fed policies for various reasons, it can be argued, are still not tight
enough. Of course the financial markets are every day agitating for a reversal of Fed policy, despite the fact that “service” related inflation is not yet under control, and of course the stock market is roaring, especially in new digital and AI-related fields.
“Black Swan” events are still possible, especially given global instability and the possibility of domestic chaos due to elections next year. Hell they are always possible, and economic prognostication is now especially hard — even for honest experts — to make.
Nevertheless, big logistic problems have been resolved, many manufactured commodities — especially imported ones — have stabilized in price or even resumed their long-term gradual decline, and of course oil and gasoline on world markets have fallen despite Saudi and OPEC cutbacks. Energy is properly not part of “core” inflation because its price changes quickly and is subject to political upheavals globally. But U.S. production capacity (as well I would add as increasing efficiency and new alternative sources coming on line) has buffered the U.S. from deep
lasting energy problems in a way not possible in the bad old days.
As one of my favorite economists puts it in commenting on the effect of all the new American energy production available:
[It’s] just the oil biz. Domestic oil production is spread across innumerable small and large drillers. Frackers can ramp up production very quickly. So when prices spiked in 2021 and 2022, they hedged part of their production at high prices and then it was drill baby drill to get those higher prices. And then they overproduce… this is the same thing over and over again, which is why, in commodities, the best cure for a high price is a high price because it stimulates overproduction, which causes the price to crash. Oldest song in the book.
Wolf Richter, Dec 12, 2023
