After the recession, a new dynamism will emerge

Near-term inflationary pressures from energy, wages and rents may abate, but pushing inflation below 4% will prove tough. To keep it from spiraling up again, the Fed may have to keep the federal funds rate FF00, 0.00% near or above 5% for several years—about double what the dot-plot indicates.

However unpleasant, we endured similar inflation for several years after Paul Volcker slew his dragon in the early 1980s. And the U.S. economy is on the cusp of a more dynamic period reminiscent of the New Economy of the 1990s.

Peter Morici MarketWatch 18 January 2023


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