Summary: Inflation is is lower (ie: the prices continue to increase, but at a rate slower than expected). The 2nd derivative of prices is down with an (expected, at the time of the speech) PCE of 6.0% YoY.<p>Powell still thinks that inflation will take a lot of work to tame and expects interest rates to remain elevated. But these results here are _better than expected_, so the stock market / bond market responded quite favorably this past Wednesday.
I think western societies are doing themselves a disservice by training people to do just one thing as a career (college "Majors" considered harmful in my view and minors are practically useless). In Neal Stephenson's book "Anathem" all the monks had a fallback profession called an "avocation" which they could do if they failed out of their primary study. And they trained for both when they were young. We'd be much better off as a society right now if we had invested in that sort of approach for the last few decades. Mid-life career retraining is really hard and scary to even contemplate.
"But recent research by Fed economists finds that the participation gap is now mostly due to excess retirements—that is, retirements in excess of what would have been expected from population aging alone. These excess retirements might now account for more than 2 million of the 3‑1/2 million shortfall in the labor force.<p>What explains these excess retirements? Health issues have surely played a role, as COVID has posed a particularly large threat to the lives and health of the elderly. In addition, many older workers lost their jobs in the early stages of the pandemic, when layoffs were historically high. The cost of finding new employment may have appeared particularly large for these workers, given pandemic-related disruptions to the work environment and health concerns.<p>Also, gains in the stock market and rising house prices in the first two years of the pandemic contributed to an increase in wealth that likely facilitated early retirement for some people."<p>Kind of amusing that to certain extent the true cause of the labor shortage runs perhaps contrary to the common narrative of "entitled millennials unwilling to work hard" but perhaps the truth is more along the lines of being due to "enjoying the fruits of early retirement" boomers and FIRE practitioners?
Looking at the Fed table, "inflation" is just redistribution of wealth: the top 1% got a bit richer, the bottom 50% got twice richer (if this word even applies to them) and the middle 49% have lost some wealth.<p><a href="https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/#quarter:131;series:Net%20worth;demographic:networth;population:all;units:shares" rel="nofollow">https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...</a>
Boomers are retiring and there aren't enough young people to fill their shoes, which creates an imbalance between supply and demand for labor.<p>>Finally, we come to core services other than housing. This spending category covers a wide range of services ... constituting more than half of the core PCE index. ... Because wages make up the largest cost in delivering these services, the labor market holds the key to understanding inflation in this category.
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>Comparing the current labor force with the Congressional Budget Office's pre-pandemic forecast of labor force growth reveals a current labor force shortfall of roughly 3-1/2 million people. ... excess retirements might now account for more than 2 million of the 3‑1/2 million shortfall in the labor force.
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>What explains these excess retirements? ... many older workers lost their jobs in the early stages of the pandemic ... The cost of finding new employment may have appeared particularly large for these workers ... Also, gains in the stock market and rising house prices in the first two years of the pandemic contributed to an increase in wealth that likely facilitated early retirement for some people.
TLDR<p>Inflation hurts the poor by reducing their marginal income buying power a few percent. If we induce a recession they’ll lose their jobs and we can reduce their buying power by 100%. Meanwhile people with excess savings will get windfall interest payments.