he New York Fed’s August survey of consumer expectations showed that Americans anticipate food prices to rise by 7.9 percent in a year, higher than the overall inflation expectation of 5.2 percent.
Federal Reserve officials have repeatedly characterized the current bout of inflation as “transitory” though they have increasingly expressed concern about the risk of a de-anchoring of inflationary expectations. That’s where confidence in the “transitory” narrative falls and people start to believe and behave as if inflation will be far stickier than previously believed, impacting wage and price-setting behavior and potentially even sparking the kind of upward wage-price spiral that bedeviled the economy in the 1970s.
October 9, 2021
Food Prices Hit Highest Level in a Decade
[See also Biden’s Inflation Now Costs Families $2.1K A Year And About To Get Worse.
One of the things about economics, the stock market, and retails sales that was difficult for me to accept was that significant components are emotion driven. It wasn’t that I rejected that it was true. It was that I wanted it to be false.
I wanted to believe that “everyone”, at least a sufficiently high percentage of people, would act rationally enough that most of the time shortages, crazy housing/tulip-bulb/Dot-Com/whatever bubbles and extreme economic cycles wouldn’t occur. I would think, “How many times must these lessons be taught in the school of hard knocks before people learn the lessons?” The answer I didn’t want to accept was that the majority of people will never learn the lesson.
I’ve become more cynical (realistic?) in my old age.
If people believe there is high inflation coming then they increase the odds that it will happen.