Recently, Bill Dudley “explained”:
I don’t really completely understand why inflation is as low as it is right now. We would have thought that at this unemployment rate, we would be seeing more pressure on wages, and that that would be ultimately filtering into prices. It may just be that it takes some time—that you have to be at this unemployment rate for six months or a year or two years to actually see the consequences for wages and prices. But it’s not a bad place to be.
It´s just the shoddiest labor market in modern times, even compared to the high inflation high unemployment 1970s.
Meanwhile, inflation is nowhere to be seen. While headline PCE moves in tandem with oil prices, core PCE remains low and stable.
Nominal consumption spending, on the other hand, confirms the view that this is a “recovery-free” expansion. Even so, the Fed is dead set on cutting it short!