Via FT
"Consider some of the global non-policy forces that might now be weighing on price inflation:

– Aging demographics, high debt loads, weak nominal wage growth and persistent output gaps in advanced economies.

– Slowing growth in emerging economies, as their catch-up period has stalled.

– The shale revolution and improving technologies across the energy landscape, along with weaker commodity price growth in recent years.

– Entrenched deflation in non-construction investment goods (and consumer durable goods) since the late 1990s.

– There continues to be a residual belief in most developed-world markets, resilient since the 1980s and the subsequent Great Moderation period, that central banks can reverse breakaway inflation. This makes it hard for inflation expectations, which can have a feedback effect on current inflation itself, from becoming too unanchored even if unexpectedly aggressive demand-side policies are pursued. (The same expectation of stability also probably helps prevent deflation.)
.......


Subdued inflation obviously isn’t a permanent state. Looking only at the broad global trends conceals tremendous variation between countries. Some economies are also more vulnerable to specific global pressures, and to currency fluctuations, than others. Domestic policy still matters most, and even when it is inadequately aggressive, plodding growth can still slowly lead an economy back towards full employment eventually, provided it goes on for a while.

But the problem that comes with running a low-pressure economy for too long is that the expansion stays precarious. Geopolitical (not to mention domestic-political) risks are always looming. The opening months of the year demonstrated that even the weather can knock the strengthening US economy off its growth path, if temporarily. Another slowdown in growth, or even a downturn, becomes more likely if negative cyclical forces reassert themselves. The same applies if measurement flaws lead policymakers to believe that their economies are stronger than they really are, prompting complacency. Finally, the delay itself is problematic given the possible hysteresis effects of people and capital going unused, lowering the slope of potential growth.

Look at the set of trends listed above, and you might recognise that many of them are diametrically the opposite of those that prevailed in the 1970s. A few of them are also quite obvious reversals from the decade leading up to the recent crisis. The point is not that policy can do nothing to countervail these global forces; it can do plenty. The point is simply that when the world changes, so does the mix of influences on price behaviour."

Scott Winship and his intellectual brethren have been first denying then minimizing the impact of growing inequality for years. I have said many many times on these pages that he/they are being intellectually dishonest Here is my first post on the matter 21/2 years ago.

This from Matt Yglesias

"And then something enormously predictable happened. Any time a depiction of growing inequality in the United States becomes popular, people who believe that increased inequality isn't bad, even if it's real, start arguing that it isn't real either. Scott Winship is one of the brightest lights of that school of thought, so he presented a long series of quibbles with both the Saez/Piketty data and Tcherneva's presentation of it which he framed as a debunking of their claims."

Matt ends with:


The bottom line is that while there is lots of room for arguing about the details of data selection, the conclusion that inequality is growing is not an eccentric discovery made by two French economists working with a particular source of income data. The broad trend is clear from a diverse set of data. Median household income growth has badly lagged per capita GDP growth, corporate profits as a share of national income have risen, and stock markets have reached record highs.

Outside the sphere of political debate, you also see the real world impact of inequality. Merrill Lynch recommends an investment strategy to its clients based on the growing economic clout of plutocrats, Singapore Airlines is now selling $18,400 first class cabin tickets, and observers think Apple is going to start selling a $10,000 watch. Conversely, Walmart is now primarily worried about competition from dollar stores. The executives at these companies are not hysterical liberals trying to drum up paranoia about inequality, they are trying to respond to real economic conditions — conditions that have entailed very poor wage growth paired with decent returns for those proserous enough to own lots of shares of stock.

Looping back to the beginning, the most striking fact about the entire dispute is that Winship himself does not disagree that inequality is at a very high level and that it has risen since the Reagan Revolution. He simply thinks it's wrong to obsess over this, and therefore that it's wrong to try to think up ways to dramatize it. But if you think that America is slipping into a doom loop of oligarchy then naturally you will want to dramatize the trend. Tcherneva's chart does that very well, which is exactly why it's so controversial.

See his post here. 

I think it matters which reference point you pick and where you are in the income distribution. If you go back to 2000, average wages for a typical worker have risen 49% while food prices are up 129%. By that metric I would say complaining is warranted. Perhaps Cullen is a 1%er and his income growth has outpaced food inflation.

Economist's View
Mark says:
"My view on whether this  problem will correct itself:
 
I’ve never favored redistributive policies, except to correct distortions in the distribution  of income resulting from market failure,
political power, bequests and other  impediments to fair competition and equal opportunity. I’ve always believed that  the best approach is to level the  playing field so that everyone has an equal  chance. If we can do that – an  ideal we are far from presently – then we should  accept the outcome as fair. Furthermore, under this approach, people are  rewarded according to their contributions, and economic growth is likely to be  highest.

But increasingly I am of the view that even if we could level the domestic playing field, it still won’t solve our wage stagnation and inequality problems. 

We’ve given self-correction mechanisms 40 years to solve the problem of growing  inequality, and the result has been even more inequality. ... Some people say education is the answer, but we have been trying to reform education  for decades, yet the problems remain. The idea that a fix for education is just  around the corner is wishful thinking.

If we want to preserve a growing and socially healthy economy, and avoid  moving to lower growth points on the inequality curve, then we will need to do much more redistribution of income than we have done over the last several  decades. We must ensure that the rising economic tide lifts all boats, not just the yachts. That means the wealthy will no longer get it all, they will be asked  to share economic growth with the workers who helped to bring it about, workers who ought to be rewarded for their growing productivity.

 We can expect considerable protest when the wealthy are asked to give up a portion of the growth that has been flowing exclusively to them for so long, and we’ll hear every reason you can think of and a few more as to why redistributive  polices are bad for America. But sharing economic gains among all those who had  a hand in creating them is the right thing to do. For the
foreseeable future,  redistributive polices appear to be the only way to ensure that workers receive  their share of the growing economic pie.

Many of the policies enacted during and after the Great Depression  not only addressed economic problems but also directly or indirectly  reduced the ability of special interests to capture the political  process. Some of the change was due to the effects of the Depression  itself, but polices that imposed regulations on the financial sector,  broke up monopolies, reduced inequality
through highly progressive  taxes, and accorded new powers to unions were important factors in  shifting the balance of power toward the typical household.

But  since the 1970s many of these changes have been reversed. Inequality has reverted to levels unseen since the Gilded Age, financial regulation  has waned, monopoly power has increased, union power has been lost, and  much of the disgust with the political process revolves around the  feeling that politicians are out of touch with the interests of the  working class.
 
We need a serious discussion of this issue,  followed by changes that shift political power toward the working class.  But who will start the conversation? Congress has no interest in doing  so; things are quite lucrative as they are. Unions used to have a voice,  but they have been all but eliminated as a political force. The press  could serve as the gatekeeper, but too many news outlets are  controlled  by the very interests that the press needs to confront. Presidential  leadership could make a difference, but this president does not seem  inclined to take a strong stand on behalf of the working class...
 
Another option is that the working class will say enough is enough and demand  change.  There was a time when I would have scoffed at the idea of a mass  revolt against  entrenched political interests and the incivility that  comes with it. We aren’t
there yet – there’s still time for change – but  the signs of unrest are growing, and if we continue along a two-tiered  path that ignores the needs of  such a large proportion of society, it  can no longer be ruled out."


If you want to see a pretty silly critique on this post read Mish.