by Neil Irwin
Axios
It has been three long years since inflation first ripped upward. But the inflation data in 2024 is, in important ways, being driven by that initial series of economic disruptions that took place in 2021 and 2022.
Why it matters: In one sense, this is good news — it implies that once these lag effects have worked through the system, inflation should settle lower without much additional economic pain.
- As Goldman Sachs economist Ronnie Walker writes in a recent note, “the remaining hot inflation appears to be lagged catch-up inflation, not reheating inflation.”
Yes, but: The bad news is that it implies the inflation of the last few years has, cumulatively, been worse than earlier data implied.