Inflation has been falling for a while. It's down to 3.4% -- higher than the 2% target, but well below the peak. The Fed is even considering cutting interest rates, which says that they think that inflation is under control.

The recent bout of inflation is less about monetary policy than about the supply side, especially things like COVID and Ukraine causing supply disruptions. Those things have levelled out and begun to decrease.

Housing costs haven't dropped enough IMO to declare a win.

I think its become clear that its a government problem, because if it was just a market problem, supply / demand would have leveled out by now.

Why would it have leveled out? Just article of faith about The Market?

Go talk to a builder. Land is ridiculously expensive due to speculation and labor is impossible to find due to it being a generally shitty job.

It’s a supply and demand problem, but it’ll take years to play out. Too many people are locked into 30-year mortgages with 26-28 years left at 2-3% interest. They’ll basically never sell (barring a major issue like having to move for a job after layoff or a divorce). So the supply of housing is much lower than normal all across the country. In some areas new construction can pick up some of that slack, but new construction is just getting into swing after a huge drop early in the pandemic.

> Housing costs haven't dropped enough IMO to declare a win.

This is a fundamental misunderstanding about inflation. If inflation goes to 0%, housing costs will stay exactly where they are now. You are looking for a deflation in housing costs, where inflation is < 0%. We had that in 2008 and it caused...collateral damage.

The only real way to lower housing prices is to build a lot more housing. So yes, it's a government problem in that we don't let private actors build housing to meet the market's demand.

Why would the market have leveled out by now?

It takes years to build any substantial housing.

> The recent bout of inflation is less about monetary policy than about the supply side

The fiscal side[0] is probably more to blame than the supply-chain restrictions. Aggregate demand was kept turbocharged since Covid through deficit spending. And given that the CPI is still 19.1% higher as of last reading compared to pre-pandemic times, whether or not the rate of change is falling, people are still rightly feeling squeezed.

[0]: https://fred.stlouisfed.org/series/FYFSD

The fed is considering dropping interest rates because the commercial real estate market is absolutely effed if they don't and they "need" to protect banks and the wealthy.

WSJ article on the pending "Doom Loop" https://archive.is/MOzr9

>The Fed is even considering cutting interest rates

What does this even mean, practically speaking? Their entire purpose is to always be considering lowering, maintaining or raising rates.

I know nothing about this stuff. Aren't they combating inflation with higher interest rates? Is it out of their control?

When you consider the politics of the doomers, its far worse than that. The economic-doomers want the Fed to lower rates to "save jobs". Because lower-rates tends to lower unemployment.

The Fed is ignoring them and keeping rates high, because the economic-doomers are wrong.

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So economic doomers complain about inflation (which the Fed is trying to fix with high rates), but also want to pretend that unemployment is secretly 10x worse than it really is for some reason.

The Fed is talking about lowering rates, because everybody is thirsty for the punch bowl. They want to be responsible, but it's sooo tempting.

Personally I believe they kept rates far too low for far too long last time, deceived by the way the free money inflated assets rather than consumer prices, and that's a big part of what caused the recent inflation spike.

Everyone I know that is an economic doomer is much more worried about inflation than they are about unemployment.

High rates favor labor money, low rates favor capital money. Low rates also improve job creation, so sometimes labor is divided.

Several rate cuts are expected this year. Based on Jerome Powell's speech yesterday, March cuts are unlikely, today's data would confirm that. Rate cuts likely beginning over summer depending on the data over the next few months.

It's 100% out of their control.

The current policy management has conclusively disproved that you must sacrifice employment to reduce inflation.

A shrinking workforce and demographic pyramid collapse will fuel inflation well enough.