No, inflation still isn’t a problem.

There’s still a lot wrong with the U.S. economy. Unemployment remains stubbornly high, just under 8 percent. Growth remains too weak to bring that rate down very quickly, which adds up to fairly dim hopes for the 12 million-plus Americans who are currently looking for work but can’t find a job.

Working-class wages are stuck in neutral. A yawning gap between the richest of the rich and everyone else – one that threatens the strength and stability of the economy – isn’t going anywhere anytime soon. The ratio of federal debt to the size of the economy is trudging upward toward levels where many economists warn it will begin to drag on growth. America’s trade deficit widened in December, continuing a general trend since the end of the Great Recession.

Know what’s not a problem? Inflation.

This is inflation. What's happening in the U.S. economy right now isn't.
This is inflation. What's happening in the U.S. economy right now isn't.

The Labor Department reported Wednesday morning that consumer prices were unchanged in December. So-called “core” prices – the better measure to watch, because they exclude volatile food and energy prices – rose by 0.1 percent. From December 2011 to December 2012, core prices rose by 1.9 percent. That’s just under the Federal Reserve’s official 2 percent inflation target, and well below the 2.5 percent inflation Fed officials have indicated they’ll tolerate while pursuing their latest measures to boost economic growth.

“Inflation remains tame, allowing the Fed to stay aggressive in providing accommodation,” Jim O'Sullivan, the chief U.S. Economist for High Frequency Economics, wrote in a research note Wednesday morning.
Ian Shepherdson, chief economist for Pantheon Macroeconomic Advisers, summed up  the price report in three words: “No threat here.”

That inflation remains benign isn’t news – it’s been this way since the end of the recession. That hasn’t stopped some conservative lawmakers, Wall Street pros and even Fed officials from warning repeatedly that higher prices are right around the corner.

Once again, the data suggest that won’t be the case anytime soon. Feel free to resume your regularly scheduled worrying about jobs. (And tell your friends to worry more, too: Unemployment has been slipping down our national priority list.)

Jim Tankersley is the editor of Storyline, where he explains complex public policies and illuminates their human impact.
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Zachary A. Goldfarb | January 16, 2013