Thread by @LHSummers

When the Administration formulated its budget in February, it expected 2 percent inflation in 2021, I was warning about inflation. Their forecast is no longer operative.

In May and June, @SecYellen expressed confidence that inflation would be back to the 2 percent range by late 2021 or early 2022. Now this forecast is no longer operative.

In @CNN interview, @SecYellen asserts twice that inflation has decelerated. This is a bit misleading as the 3 month and 12 month CPI inflation rates are both around 5 percent on an annual basis.

And the trimmed mean and median inflation rates that exclude aberrant sectors (which used to be a stable of Administration's rhetoric) are now accelerating.

The TIPS market is suggesting inflation in 3 percent range over 5 years and more next year. Breakeven inflation over 5 years is up 40 bps in the last month. Expectations data are even more disturbing.

This is part of why my alarm is increasing and Treasury should be as well.

Given lags in the indices, housing inflation is almost certain to soar in coming months. With super tight labor markets, rising strike activity and real wages having declined, increases in wage inflation are likely as well.

I actually believe the gap between Treasury & Fed statements and the everyday experience of businesses and consumers in terms of inflation has widened in recent months. Until the Fed & Treasury fully recognize the inflation reality, they are unlikely to deal with it successfully.

Thanks @KateDavidson, tweet is back, inadvertently deleted
I began my career when Paul Volcker was taking over at Fed & not since then have I been more worried. I'm curious at what point in last 40 yrs Treasury thinks the risks of an inflation spiral are greater than they are now