I read lumber has not gone down in price since last week of March.
The Fed and the CEA last week put out inflation numbers and immediately tried to downplay them as "April 2020 was a low base" and "reflation". Economist I read occasionally take:
https://johnhcochrane.blogspot.com/2021/04/inflation-levels.html#moreMarch inflation is up. The CEA delivered a historic tweetstorm. It starts with
temporary factors: base effects, supply chain disruptions, and pent-up demand, especially for services
I'm glad for once to have nailed a forecast: That Fed and Administration's first response to inflation would be to invoke "temporary" factors, just as in the 1970s. We'll see how that pans out.
The CEA goes on to "base effects,"
In the near-term, we and other analysts expect to see “base-effects” in annual inflation measures. Such effects occur when the base, or initial month, of a growth rate is unusually low or high..
This unusually large price decrease early in the pandemic made April 2020 a low base.
Since this is about the past, we can say something more definite. Yes, if you start from a low base, you can see a lot of growth. To get around the arbitrariness, let's look at price levels. Here is the recent CPI (blue) and CPI less food and energy (red). These are the levels of the CPI -- conceptually how many dollars it takes today ($271) to buy what $100 bought in 1983.
This is non-seasonally adjusted CPI (blue) and CPI less food and energy (red). If anything the story, reflation was over last fall and this is something new is clearer. But, as 2019 reminds us in both graphs, stuff happens.
David Einhorn's last newsletter he went through a bunch of real-life things that showed how broken the market was (including Archegos and Gamestop). I'm left with the impression cheap money being thrown everywhere and long-term zero percent interest rates have created a ridiculous operating environment. Interest rates have to rise. In fact, I disagree with the notion you can even claim an economy is "healthy" when operating at ZIRP or near-ZIRP. When interest rates rise however, a lot of people are going to be dragged kicking and screaming going into it, which is why I don't expect the government and the Federal Reserve to go that route...which is what happened in the 1970s. We've been on ZIRP or near-ZIRP for 13 years now. There's an entire generation of people that don't understand how debt operates when you have to pay higher interest, be it the 30-year-old looking to buy a house or a guy on Wall Street valuating companies or a venture capitalist or a Congressman that doesn't have a clue about how Treasury yields affect budget discussions.