Leveling Off

If you floored the gas pedal in your car, the acceleration would be quite apparent. As your speed climbed higher and higher, though, the rate of acceleration would eventually decline until you reached your car’s maximum speed. No longer accelerating, you would still be traveling at an unsafe speed.

Inflation is a lot like that. No longer picking up speed as quickly, price levels for the things we all need – shelter, transportation, medical care, food, etc – are still quite high. The average American won’t be too excited about CPI (just a measure of year over year price changes) if he still can’t make ends meet.

This is why consumer confidence, due out at 10am ET, is so interesting at a time like this.

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