Why Inflation Will be Hard to Contain

Image Credit: iStock | Cemile Bingol

After staying at a pleasantly ignorable level for years, inflation is once again making headlines.

And so the pundits and talking heads are falling over each other trying to explain what’s going on.

And, of course, the Russian war in Ukraine, as well as lingering pandemic problems, are making their contributions.

But I believe there’s another, more serious, root cause at work.

Let’s look at a few charts.

I cribbed this first one from a recent Barry Ritholtz piece, and he seems to have gotten it from the Hustle.

The point is clear: when compared to the median income, the median home price in the US has grown from 2.2x in 1950 to 6.3x in 2020. Which means that home prices are growing much faster than wages.

Why might this be?

Let’s look at another chart.

This one comes from macrotrends.net.