Economist Bill Conerly: U.S. Inflation Concerns Stem From Huge Federal Deficits

Economist Bill Conerly says the great concern about U.S. inflation must come from the large and growing federal deficit. Regardless of the outcome of the presidential election, there will be more deficit spending.

Economists debate the impact of the deficit on inflation, but even if the role of the deficit is small, it means that the Federal Reserve needs to keep interest rates restrictive for quite some time.

The employment side of the Fed's “dual mission” has become less hot, not only is the unemployment rate slightly higher than it was two years ago, but the number of voluntary resignations and job openings have both declined.

The Fed believes the economy is strong, but still in the middle ground. They will likely continue to cut rates through this year and through the end of 2025, but what happens after that is an open question.