Will people think things will get back to normal soon, per NEC Chair Hassett (fm ABC News)?

“Well, look, in the end, people look at their wallets and they decide how to vote, and if they look at their wallets and look at how much money they have after the increase in prices, they’re going to find that they have a lot more money.”

Hassett did acknowledge high energy prices are causing a pinch but said he was hopeful that would subside soon.

“That’s extremely frustrating, and it’s something that we’re working on doing lots of different things to minimize the disruption, and hopefully again the problem of the Gulf will be over soon, and then things will go back to normal.”

I’m dubious. Expectations incorporated into a graph of the price level (in logs):

Figure 1: Headline CPI (bold black), CPI nowcast of 5/29 (black circle), implied price level from Michigan survey mean (black open circle), from NY Fed median (gray triangle), Cleveland Fed SoFIE (gray square); chained CPI, n.s.a. (green), CPI for wage earners and clerical workers (red), CPI-ex shelter (orange), PCE deflator (purple), PPI final demand (teal), PCE deflator, market prices (chartreuse), GDP deflator (pink), AIER Everyday Price Index (blue), all in logs, 2025M01=0. Source: BLS, BEA, S&P Global, AIER, U.Mich, NY Fed, Cleveland Fed, and author’s calculations.