U.S. Economy
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One of the biggest economic surprises of 2023 was how quickly inflation faded. A dig into the details offers hints at whether it will last into 2024.
Prices climbed rapidly in 2021 and 2022, straining American household budgets and chipping away at President Biden’s approval rating. But inflation cooled in late 2023, a spurt of progress that happened more quickly than economists had expected and that stoked hopes of a gentle economic landing.
Now, the question is whether the good news can persist into 2024.
As forecasters try to guess what will happen next, many are looking closely at where the recent slowdown has come from. The details suggest that a combination of weaker goods prices — things like apparel and used cars — and moderating costs for services including travel has helped to drive the cooldown, even as rent increases take time to fade.
Taken together, the trends suggest that more disinflation could be in store, but they also hint that a few lingering risks loom. Below is a rundown of the big changes to watch.
What’s happening in America right now is what economists call “disinflation”: When you compare prices today with prices a year ago, the pace of increase has slowed notably. At their peak in the summer of 2022, consumer prices were increasing at a 9.1 percent yearly pace. As of November, it was just 3.1 percent.
Hotel price increases look much as they did before the pandemic, while airfares have recently fallen.
Source: Bureau of Labor Statistics
By The New York Times
Used vehicle prices fell in 2023. New car prices have been climbing, but more slowly than in 2022.
Source: Bureau of Labor Statistics
By The New York Times
Rent increases and a measure that approximates the cost of owned housing are both slowing only gradually.
Source: Bureau of Labor Statistics
By The New York Times
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Will America's Good News on Inflation Last? – The New York Times
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