The root of what’s going on here can feel obvious: blame inflation, which picked up in mid-2021 and throughout 2022. But that isn’t really the issue anymore, at least not at the current rate, because inflation is coming down. The actual problem here is prices.
They’re not going up nearly as much as they were in, say, the middle of last year, but they’re by and large not declining en masse, either. And in most cases, they won’t get back to where they were in the Before Times.
This is the best summary I could come up with:
“Inflation in the US is falling relatively quickly compared to all of our other peer countries, and we have the strongest growth out of the recession,” said Felicia Wong, president and CEO of the Roosevelt Institute, a progressive think tank.
The truth is we’re never going back to how things were in 2019 — we won’t be returning to the office at the same levels, we’ll never hear “corona” and only think of beer, and that night on the town is going to cost us more than it did before.
Even if prices have stopped going up at the rate that they were, it still sucks if you still are anchored to what things were in 2019,” said Matthew Klein, the founder and publisher of The Overshoot, an economic research service.
As the Wall Street Journal noted in October, the prices of a number of items, from milk to gasoline to new cars, have declined from their recent peaks but are still above where they were ahead of the outset of the Covid-19 outbreak.
Deflation is also a negative for contracts like mortgages and other debt instruments, he explained, because the amount of money borrowers have to pay is fixed, and if prices are falling, it becomes more of a burden.
Wage growth lagged inflation throughout much of the past couple of years, meaning that while people were getting more money in their paychecks, it didn’t feel like it because prices were going up so fast.
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