Trying to clarify my own thoughts on inflation. I got inflation wrong; I didn't see the current surge coming. But why? I didn't think the fiscal stimulus early this year would boost demand as much as Summers et al predicted ... and, in fact, so far it hasn't 1/
Real final demand (excluding inventories) is up 2.6% over the past two years. That's well short of normal growth in potential output 2/ 
What's happened, however, is that we've faced supply constraints, both supply-chain issues in meeting huge demand for durable goods and withdrawal of workers from the labor force, i.e. Great Resignation 3/
This doesn't say that the inflation will necessarily be transitory, although I think that's still the best bet. But it is important to realize that the story is more complicated than excessive stimulus 4/
This is a very good analysis of where we appear to be at right now 5/ theovershoot.co/p/the-case-for…
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