The latest consumer price numbers arrived on Wednesday, and they were better than even optimists expected. Even the media, as far as I can tell, have generally omitted the “but concerns remain” qualifiers that seemed mandatory when covering good news about the Biden economy.

Which doesn’t mean everyone was happy. Republicans are more or less in no, no doubt worried that they might be losing almost their only substantive campaign issue — leaving them with nothing to run on but a wake and Hunter Biden. And there have been some pretty bleak reactions from economists who have committed themselves to the bleak view that we’re going to face a bad”sacrifice ratio” — that controlling inflation would require years of high unemployment.

Because this report was anything but terrible. It strongly suggested that we may be headed for a soft landing – a return to reasonable inflation without a large increase in unemployment. We’re not there yet, and I’ll talk about what might still be going wrong soon. But a happy outcome, which not long ago seemed like wishful thinking, now looks more likely than not.

To understand what the report told us, you first need to know that few serious analysts paid much attention to the two numbers that dominated most news reports: headline inflation and “core” inflation, excluding food and energy, over the past year.

Overall inflation was driven largely by clearly temporary swings in volatile prices: The 16.5 percent decline in energy prices while last year will not be repeated.

Core inflation, on the other hand, is at this point dominated by official shelter prices, which lag market rents by a year or more. So the core number still reflects the big 2021-22 strengthening in rentsitself probably driven by the an increase in remote work rather than what is happening to the economy now.

So most of us are now looking at measures that try to bypass these distortions. I’m a fan of “super core,” core inflation minus shelter and used cars. Others prefer different measures, but they all say the same story: a rapid decline in underlying inflation although the unemployment tax is the same as a year ago.

Super core inflation, for example, was 3.5 percent over the past year, 2.7 percent at an annual rate over the past six months and 1.1 percent over the past three months. Even I don’t believe that three-month figure, which was probably depressed by statistical noise, but the six-month number is down from 6.8 percent a year ago — and it’s not too far off the Federal Reserve’s target of 2 percent. And this decline, as I said, occurred without any rise in unemployment.

Why did things go so well? Part of the answer is probably that until recently, disruptions related to the pandemic still caused some inflation, but those disruptions have disappeared. Part of the answer may also be that when the economy heats up, policies that cool it down — like the Fed’s recent rate hikes — can. reduce inflation without much adverse effect on employment.

So what else can go wrong?

First, this may be a statistical hoax – noisy data may make things sound better than they are, or future data revisions may take away some good news. I don’t think that’s happening, but anyone who has followed inflation data these past few years is always worried about that possibility.

Second, most estimates of underlying inflation are still significantly above the Fed’s target (though in the case of my preferred measure, not by much), and some economists argue that squeezing out that last bit will be painful. All I can say is that we have heard such warnings about the “last mile” to fight inflation. enough time, and so far core inflation has just continued to fall. Also, if getting all the way to 2 percent is going to be really hard, shall we even bother?

Eventually, we could get a recession even if we don’t need to control inflation. So far the economy has proved remarkably resilient in the face of rising interest rates, but monetary policy often works with a lag, so there could, to mix metaphors, still be a recession in the pipeline.

So we haven’t touched the runway yet, and a soft landing is not guaranteed. But it now looks amazingly attainable.

And if we get that soft landing, I hope we’ll see some reevaluation of economic policy over the past few years. Both the Biden administration and the Fed have been the targets of harsh criticism for initially missing the risk that engaging in large federal spending while keeping interest rates low would lead to inflation. But they have presided over a remarkable boom in job creation, not only reversing the job losses of the pandemic recession into one of the fastest recoveries in modern history, but also arguably creating the best job market in a generation.

The burst of inflation of 2021-22 was a shock, but if it turns out to be temporary and ends without significant suffering, it will be hard to avoid the conclusion that recent economic policy, all things considered, has been pretty good.

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