In his news conference June 15, 2022, Federal Reserve Chairman Powell said he expects inflation will be in the normal target range of 2% by mid-2024. Considering that inflation is now running at a 41-year high of nearly 9%, his expectation is bold, indeed,
A look at U.S. inflation history suggests Powell’s expectation is completely unrealistic. For 1973-1981, inflation averaged a very high 9.3% per year! Do you remember the federal government’s 1974 attempt to spur a grassroots movement to combat inflation? It was called Whip Inflation Now (WIN). People who supported the movement were encouraged to wear WIN buttons. WIN was a big failure. The annual inflation rate reached 13.3% in 1979 and 12.4% in 1980.
Currently in the U.S., there are about two job openings for every unemployed person; this is a historically unprecedented dislocation between the supply of and demand for labor, which will continue to be a key driver of inflation as businesses are forced to raise wages in order to attract and retain qualified employees.
To me, the message is clear: inflation far above 2% could last into the 2030s! The stock market hates inflation, so find a safe place to protect your money in the next several years.