There are already signs that U.S. inflation might be cooling. U.S. import prices (which exclude tariffs) fell by 1.4% in July for the first time in seven months. Meanwhile, core inflation in goods and services (excluding food and energy) fell to 5.9% in July from a high of 6.5% in March, before rising again in August. While these price pressures are beyond the Fed’s control, the U.S. has the tools to mitigate their impact.
That said, we cannot expect inflation to return to the Fed’s target of 2% anytime soon. But we can expect inflation to stabilize in the mid-single digits—an outlook that can give those allocating capital some degree of confidence in the U.S. economy. In fact, from an investment perspective, it is hard to find another economy that can match what the U.S. offers: ample natural resources, effective governance, a history of immigration, and a global reserve currency.
That is an ideal inflation-busting toolbox. By comparison, most other countries are far more dependent on the global economy. In today’s world, that leaves them more exposed to inflation.
Dambisa Moyo, an international economist, is the author of four New York Times bestselling books, including Edge of Chaos: Why Democracy Is Failing to Deliver Economic Growth—and How to Fix It.