Now that inflation is back, it's not going away anytime soon. The Federal Reserve expects it to fall below 3% next year and eventually go back to 2%. But there are reasons to think that’s far too optimistic. We are living in a new world. Even after things get back to normal that could mean inflation averages 4% or even 5% for the foreseeable future.
The Fed can almost be forgiven for its optimism. The idea that inflation was no longer a concern had become conventional wisdom before the pandemic. Many articles were written explaining why. Pension funds pulled back on their promises to increase benefits with inflation, and hardly anyone noticed.
