If the unemployment rate is high, people worry about unemployment. If it’s low, they don’t. If it’s hot outside, people complain about the heat. If it’s cold, they complain about the cold. But when it comes to inflation, a broad swathe of people like to complain about inflation whether or not inflation is actually happening. For example, Annie Lowrey notes Rob Cox in The New York Times fretting that the Fed is paying too much attention to the unemployment rate and ignoring signs of inflation that come in the form of robust sales at Whole Foods. As she says “if you want signs of inflation, you will find signs of inflation” but that hardly proves anything.
When you’re looking to measure aggregates, you look at the aggregate. And the fact of the matter is that the most recent inflation numbers show zero inflation. Over the past year we’ve seen the least inflation of any year since World War II. If there has ever in your life been a time when you didn’t worry about inflation, you should think about that time. Then you should ponder the fact that today we have more excess capacity than we did at that time. We have higher unemployment than we did at that time. And we have less inflation than we did at that time. So why are you worried now?