It brings the memories flooding back, and not in a good way. Inflation in the U.S. is now up to 6.8%, its highest level since March 1982, when everyone was listening to the J.Geils Band and Joan Jett and the Blackhearts. For my first attempt to get to grips with the numbers, take a look at the latest Risks and Returns discussion with Lisa Abramowicz, which we recorded from my place of self-isolation in London:
I think our main point of agreement was that the markets’ complacency about the numbers was concerning. It’s true that the November figures were roughly in line with expectations (as noted by Paul Krugman in the New York Times) and was not another of this year’s big surprises. But there was plenty in the report to convince skeptics that this dose of inflation will not go away of its own accord (you can read my considered take from Friday here). It will need some changes to monetary policy to dislodge it, and that opens up the possibility of a mistake.