About the author: Gregory Daco is the chief U.S. economist at Oxford Economics and former board director at the National Association of Business Economics.
It’s not runaway inflation, and it’s certainly not stagflation. In fact, what the U.S. economy is going through is a severe case of “M.E.S.S.I.” inflation dynamics: Moderating Expansion with Sticky Supply-driven Inflation.
The U.S. is experiencing a rare phenomenon where strong, but cooling, demand is met by constrained, but accelerating, supply leading to transitory, yet sticky, inflation. These dynamics aren’t purely a reflection of supply constraints; nor are they only an indication of strong demand. Rather,