Meanwhile the course they must steer gets trickier by the day. Central banks had blundered into the high-inflation regime in which we find ourselves. Now, they seemed finally to be reversing out of trouble. The sharp rise in interest rates was starting to eat into profits and asset values, helping to lower inflation, thereby moderating wage demands. But while it’s coming down, inflation is nowhere near contained.
So this drama is just beginning. Lest all this seem gloomy, there’s still some good news to be had. Fundamentally, the economy is sound. Real wages have just turned positive. That’s not only good for working people but also means demand will likely remain strong enough to keep the economy from sliding into anything worse than a shallow recession. And while mortgage bills will tighten belts, working people whose real earnings are rising will be able to weather the storm.
Sleeping with a bear might get you early hugs but will end badly for you when he gets truly hungry