Why Adam Posen Thinks Inflation Will Surge Back to 4%
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 13 February 2026
⏱️ 57 minutes
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Summary
The future is always tough to predict, but generally when it comes to inflation, a lot of the debate is about how long it will take the Federal Reserve to get back to its 2% target. In other words, people generally agree on the direction, but disagree on the speed. But our guest on this episode violently disagrees with the consensus direction. Peterson Institute President Adam Posen thinks inflation will be back at 4% by the end of the year. He first unveiled his thesis in a piece co-written with Lazard's Peter Orszag last month. Posen argues that the lagged effect of tariffs, immigration, further fiscal easing, and declining Fed credibility will combine to cause prices to reaccelerate. In this conversation, we speak with Posen about his thesis, and why he thinks the reports of economic softening are mistaken. We also talk about the broader geopolitical landscape and whether Europe is ready to really change its relationship with the United States.
More: A Very Non-Consensus Inflation Call
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Transcript
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| 0:00.0 | UKG, their HR, pay, and workforce management tools help business leaders empower their people. |
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| 0:33.7 | Music Podcasts Radio News Hello and welcome to another episode of the Odd Lots podcast. |
| 0:35.0 | I'm Joe Wisenthall. |
| 0:36.1 | And I'm Tracy Allaway. |
| 0:38.9 | Tracy, you know, future economy, |
| 0:44.5 | it's always uncertain path of the path of inflation, path of employment, always big debates. |
| 0:48.8 | I think what's really interesting right now compared to a few years ago maybe is, you know, |
| 0:53.8 | at various times it's like inflation is going to come down, but there's a fight over how fast, right? And now you have a situation which there are people who argue both sides. Some people are like, oh, no, we're on a, you know, we're heading down, the sort of yield data camp, et cetera. And others are like, look, we're re-accelerating. It's going to get hot again. And we're recording this February 11th. We just had a fairly strong jobs print, |
| 1:11.1 | et cetera. And so some people are making the reacceleration argument. We are so back. So back. |
| 1:16.8 | Well, that jobs report. I mean, it was a blowout numbers. Yeah. |
| 1:19.3 | 130,000 jobs added in January versus expectations for 65,000. And even if you drill down into it, |
| 1:27.0 | like, it looks pretty good, right? |
| 1:29.3 | But you're absolutely right. So we used to argue about how far we would travel in one direction, |
| 1:35.8 | you know, inflation. Is it going to be 4%? Is it going to be 5%? Whatever. And now we're |
| 1:41.5 | sort of arguing about which direction we're actually going to go. |
| 1:44.8 | Totally. And I think like if you just look like, okay, one job's report can't, you know, |
| 1:49.3 | take it with a grain of salt. There is, there does seem to be a lot of evidence of some |
| 1:53.4 | softening in the labor market by a lot of different measures, et cetera. Housing market continues |
| 1:58.7 | to be fairly soft. On the other hand, look at various commodities, |
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