Good post Diane. This is core PCE, the Fed’s favorite inflation metric (until then inflation task says otherwise). It is color-coded to reflect the different expansions. Green=post 9/11 recovery Red=post Financial Crisis recovery Blue=post COVID recovery Also shown is the average and +\- 1 Standard Deviation range (shaded) for each period. —- From 2009 to 2021 (red) Core PCE exceeded 2% only 5 times, 3 in 2012 and 2 in 2018. The average inflation rate for this nearly 12 year period was 1.56%. Post COVID (blue) just completed it 65 consecutive month above 2%, something Warsh specificially highlighted in his Jackson Hole speech. And its latest reading is still above 3%. Its average has been 3.53%, fully 2% higher than the previous cycle. —- The problem with inflation is not that it is accelerating, rather is has not been disinflating enough to get anywhere near 2%, and is still above 3%. This is a problem, reflected in nearly every political poll saying “affordability,” inflation by another name, is far and away the number 1 economic problem in the country. For those that dismiss inflation concerns... The blue post-COVID period is not like the previous two cycles (the famous Seasme Street song) What is needed is a strong argument for why inflation has been above 2% for 65 straight months and what just changed that will now disinflate back under 2%. Diane lays out a strong case that not only is that massive disinflation not here, but a stronger case can be made reinflation is more likely. —- The bond market is worried about this as long term yields are multi-year highs. Once this problem is addressed, yields can calm down. Or, as I often say. “Bond Traders can stop panicking when the Fed starts panicking.” Hike rates, and long-term yields can peak. Cutting rates, and refusing to hike, is driving them higher. @profplum99(Jim Bianco)