The real reason for the decrease in inflation

The real reason that inflation declined is partly due to the actions of the Fed, but it is also because supply chains are starting to be able to work better, according to Professor Dale Rogers of the ASU W. P. Carey School of Business.

A major step happened two weeks ago in China where they are relaxing their Covid requirements while saying officially they are not doing that. Rogers seems to think that also have a good impact on inflation.

What impact would the recent rail strike have on the economy?

“It’s a huge thing; it would’ve impacted us in ways that you wouldn’t necessarily think. It would’ve driven up the price of fuel. The truth is though is the government never lets rail strikes go for very long,” said Rogers.

“I don’t think it would’ve really gone on very long, but it’s a huge deal, maybe $2 billion a day would’ve been the impact, negative impact, of the rail strike,” said Rogers.

Did the feds help ease inflation?

“It’s kind of like helping with a sledgehammer; it’s not great to have them crush demand so the supply can catch up with the demand in some ways,” said Rogers.

“They’re very aware. I spoke to the Fed in October; they’re very aware that a huge problem was the supply based inflations,” said Rogers.

What’s happening now that wasn’t happening then?

“It’s taken some time to turn the faucet on. The other thing is that zero-COVID policies in China and throughout Asia have been really damaging the supply chains, and still are,” said Rogers.

Is there a connection of falling fuel prices with China?

“What we’re seeing is global transportation costs coming down very quickly. Now we’re below four thousand a container; we’ve really come down. We’re seeing real degradation in the price of fuel and use of fuel really globally,” said Rogers.