Federal Reserve on cusp of what some thought impossible: Defeating inflation without steep recession

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It was the most painful inflation Americans had experienced since 1981, when “The Dukes of Hazzard” and “The Jeffersons” were topping the TV charts

WASHINGTON — It was the most painful inflation Americans had experienced since 1981, when “The Dukes of Hazzard” and “The Jeffersons” were topping the TV charts. Yet the Federal Reserve now seems on the verge of defeating it — and without the surge in unemployment and the deep recession that many economists had predicted would accompany it.

Inflation has been falling more or less steadily since peaking in June of last year at 9.1%. And when the Fed's preferred inflation gauge for November is reported next week, it's likely to show that in the past six months, annual inflation actually dipped just below the Fed's target of 2%, economists at UBS estimate.

The cost of goods — such as used cars, furniture and appliances — has fallen for six straight months. Compared with a year ago, goods prices are unchanged, held down by improved global supply chains.

Housing and rental costs, a major driver of inflation, are growing more slowly. Wage growth has cooled, too, though it still tops inflation. Milder wage growth tends to ease pressure on restaurants, hotels and other employers to increase their prices to cover their labor costs.

“I think it’s really good to see the progress that we’re making,” Chair Jerome Powell said at a news conference Wednesday after the Fed's latest policy meeting. “If you look at the… six-month measures, you see very low numbers.”

On Friday, the Congressional Budget Office, a nonpartisan agency, estimated that inflation will drop to 2.1% by the end of next year.

There will likely be bumps on the road toward getting inflation fully under control, officials