Inflation Part 2: The Bark That’s Worse Than the Bite

Last May, my colleague Aaron Waxman wrote a timely blog post entitled “Inflation: The Dog That Hasn’t Barked,” outlining the absence of inflation during the start of the COVID-19 pandemic. Fast forward a year later, much has changed: the total U.S population is approximately 40% fully vaccinated, businesses are reopening, and the economy is expected to grow 5.1% in 2021 after contracting 3.4% in 2020.1 With a relatively sharp recovery underway, inflation is again in the headlines after April’s core personal consumption expenditures (PCE) index surged 3.1%, its highest increase since 1992.2 In the article below, we provide an updated perspective on 1) what’s driving inflation, 2) whether we should be concerned about inflation, and 3) key wealth planning action items for inflation longer term.