News analysis
The good news is that price hikes have pulled back a bit even if real-time aggregates are still running up 10 percent year-over-year. That’s better than it was two months ago, with food, transportation, and household durables rising at slightly slower rates. Utilities and education are up, however, so the bad news is that this sector-by-sector shift likely indicates no good trend overall but rather the aches and pains of recessionary adjustments.
Housing illustrates the point perfectly. Even in the face of falling demand, prices are still rising. Commentators are quick to point to restricted supply but there is another culprit about which people are still unwilling to speak: old-fashioned devaluation of the dollar. The strange economics of an inflationary recession are so unfamiliar to most people, but we had better get used to it. It is the defining mark of our times….