Part 1: Five structural changes in the near future

This essay challenges the consensus view that inflation will fall back to its pre-pandemic lows once supply chain shortages have been overcome. We agree with the consensus that today’s shortages will indeed be resolved, especially given the ingenuity of the private sector to reinvent itself and to create new supply chains if and when needed. This will cause inflation temporarily to fall back to a level that, while low, will be somewhat higher than that of the pre-Covid years. But we do not believe that longer-term inflation will revert to its pr...