Odd Lots · Monday, August 31, 2026
Richmond Fed President Tom Barkin suggested that the current economic environment may represent a new 'normal' for inflation, contrasting it with the disinflationary factors of the past decade, such as fracking, favorable demographics, and e-commerce. He believes a combination of factors could now be contributing to upward inflationary pressure, requiring the Fed to 'lean against the wind.'
“It seems like it. And I think the question is, is normal today or was normal 10 years ago? And I think normal may be a lot more like today than it was 10 years ago. If you think about the environment of 10 years ago, fracking and what that did to help bring energy prices down. And demographics, which meant you had more workers and kept wage costs under control. And e-commerce, which was bringing prices down for stuff you bought online. And there were just a bunch of globalization, access, all these factors which were, I think, bringing inflation down.”
“I don't think it's ridiculous to imagine that 10 years later you might have a bunch of factors that would bring inflation up. Now, the inflation we realize in time depends on what we do about it. So just because, you know, I like to use the analogy of sailing. You know, you just sail differently if you've got the wind behind you than if you're sailing into the wind. You can still get there. You just have to, you know, tighten your sheet. And I think that's the kind of risk we've got if you're in a world with an ever-continuing set of inflationary shocks. You just have to lean against that wind.”