Inflation after the spike

People who talk about inflation as if it were a fever that broke are looking at the wrong chart. The 12-month rate can fall while the grocery ticket stays high, because the rate is the speed, not the altitude. Families live at altitude. That is why you can have a "soft landing" on a slide deck and a pissed-off country in the parking lot of a Giant Eagle.

The spike had several parents: pandemic demand that shifted into goods, snarled supply, a war that hit energy and grain, and a lot of fiscal firehoses. Arguing about which parent deserves the most blame is a sport. For policy going forward it matters less than the leftover: rents that reset, wages that chased, and a Fed that raised rates until something cracked in regional banks and housing turnover.

If you only tell the wage story, you miss that some households got raises and still lost because shelter ate them. If you only tell the corporate-greed story, you miss that a lot of small firms were passing through costs they did not invent. Greed exists. So does a supply curve. Using one as a religion is how you get a dumb price-control idea or a dumb "let it burn" idea.

Interest rates are a blunt instrument. They cool bidding. They also punish anyone who needs a car loan or a house, and they help people who already own duration. That distribution is not a conspiracy. It is how the tool works. A democracy that only has the blunt instrument will keep hitting renters to treat a national average.

The next fiscal argument is already here: deficits, interest on the debt, and a Congress that likes cutting other people's line items. If rates stay higher than the 2010s, the debt service line starts eating the rest of the budget in a way that is not theoretical. That is a domestic issue even if it sounds like accounting.

Tariffs are popular because they feel like doing something to China. They are also a tax that shows up in prices with a lag, which is convenient for the people who vote for them and then complain about the lag. You can want industrial policy and still admit a tariff is not free. I would like that sentence to be legal in both parties.

My job is not a think tank. I sit with people who want a used Corolla and a rate that does not look like a prank. The analytical point I would put on the Forum is small: stop using "inflation is over" as a victory lap while the price level is a scar. Scar tissue is politics. Ignore it and you will be surprised again in 2028.