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Conor Sen

Don't Count Soaring Freight Costs Among Inflation Worries

Disarray in the shipping world is actually acting as a brake on growth, helping cool the economy until prices can come back down.

An underappreciated counterweight for the economy.

An underappreciated counterweight for the economy.

Source: VCG/Visual China Group

Soaring freight costs have been one of the key pain points in the U.S. economic recovery this year, contributing to inventory shortages and higher prices. It's still unclear to what extent and how quickly these higher prices might ease as the recovery progresses. Regardless, they should be seen as what they are: a shock that's having a cooling effect on economic activity, rather than a long-term driver of inflation.

We've been here before, in the 2000's with high oil prices and a few years ago with tariffs. If freight costs do come down over the coming months, they'll work as a kind of economic stimulus that would help offset any tightening of monetary policy the Federal Reserve might do over that time.