There are millions of Americans that are a lot smarter than the house-broken economists and media airheads who keep bloviating about “transitory” and “temporary” inflation. From Wolf Richter at wolfstreet.com:
And those who experienced the 1970s & 1980s inflation as adults expect 6.0% inflation a year from now.
The Fed keeps discussing consumer inflation expectations as one of the key metrics in assessing the path of inflation in the coming years. Inflation expectations suggest to what extent consumers might be willing to accept price increases, thereby enabling inflation. Consumer price inflation is thought to be in part a psychological phenomenon, similar to market prices. When the inflationary mindset takes over, consumers accept higher prices instead of going on buyers’ strike as they infamously did with new cars in 2008 through 2013, when demand collapsed and stayed down for years.
Consumers’ median inflation expectations for one year from now jumped to 5.2% in August (red line), the highest in the survey data going back to 2013, and the 10th monthly increase in a row, according to the New York Fed’s Survey of Consumer Expectations today. The survey also tracks consumers’ expectations of their earnings growth. And that combo became a hoot (more on that in a moment).
Inflation expectations for three years from now jumped to 4.0% (green line), the highest in the survey data. People are starting to blow off the Fed’s endless sermons about this inflation being “temporary” or “transitory.”