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As inflation cools and Federal Reserve Chair Jerome Powell hints at interest rate cuts next year, markets are rallying and consumers are spending. Yet many Americans remain pessimistic about the economy as the cost of living continues to soar, particularly when it comes to housing.
Straight Arrow News contributor Peter Zeihan explains why inflation jumped so dramatically and why it’s now coming down. He also highlights a new employment issue he says will impact Americans for decades.
Excerpted from Peter’s Dec. 15 “Zeihan on Geopolitics” newsletter:
I’ve got some good news and some bad news on inflation in the US…one has to do with COVID, and the other is about the labor market. Which do you want first?
Let’s start with the good news. The U.S. is finally emerging from its COVID mask of changing consumer behavior and crazy supply chain dynamics. That means we’ve settled into more stable consumption patterns, and supply chains have finally caught up…so headline inflation is decreasing. Yay!
Now, onto the bad news. We’re entering a (two-decade-long) period of labor shortages. As baby boomers retire, the Zoomers won’t be able to keep up with labor demands. And that shortage is only going to get worse until the mid-2030s.
While it’s nice to finally see COVID in the rearview mirror, we’re coming up on something much stickier that will plague our inflation rates for a while.
