The defining economic issue of the US election

NEW HAVEN, Connecticut — Economists are struggling to reconcile their upbeat views on the United States economy with the angst of average Americans. The key measures of economic performance — growth, unemployment and inflation — are almost perfect, putting the US in an enviably strong position. But ahead of November's presidential election, voters continue to cite the economy as a top issue. The main problem: inflation.

How can this be? To the exasperation of most economists, all this handwringing seems terribly misplaced. The Covid-19 shock to US prices from the spring of 2021 to late 2023 has subsided dramatically. Yes, we are still waiting for an all-clear sign that inflation is settling back down to the 2-percent target that the US Federal Reserve (Fed) judges to be consistent with price stability. But there can be no mistaking a significant reduction in inflation risks.