In most areas, inflation is not out of control. On an annual basis, inflation is rising at around 3%. Most economists believe that modest further tightening by the Federal Reserve will, over time, bring inflation back to the 2% target set by the country’s central bankers. Moreover, except for 2022 during the postpandemic inflation surge, the inflation rate for food consumed at home has been around 2% over the past 20 years. Similarly, adjusted for disposable income, U.S. households spend dramatically less on gasoline than they did 20 years ago. Cars are dramatically more fuel-efficient.
However, there are isolated segments of the economy where inflation is a serious problem: primarily in terms of housing, healthcare, childcare, and higher education. In each case, prices are rising significantly faster than wages because of deliberate political and social choices made by voters.
