The conversion of i. labor restriction below what we experienced in 2019 that leads to wage growth, and ii. energy and commodity demand that outstrips supply, is the only path to 2% plus inflation- and the only path to this outcome is through legislation to mandate onshoring, or a large national infrastructure plan.
Legislation (Executive Order) has been signed mandating that certain critical products be manufactured inshore. Whether additional products are added to that list or if products beyond those deemed critical will receive a similar mandate is an unknown If a product is not directly related to national security, it could not be a law or Executive Order, it would have to be laws assessing penalties on imports- tariffs (this is an impossible scenario when trade deals are considered. In the case of critical products, extreme tariffs- or outright restrictions on imports would be required to protect domestic manufacturing).
An infrastructure plan will cause an enormous demand for labor, and that labor pool will be innately domestic labor. Because the labor will be skilled, it will cause wage growth as corporate America has to compete with the government (it would even create vast infrastructure imbalances and unfixable shortages in certain skills).
Combine either of the above causes of a significantly tighter US labor market with energy supply restrictions due to federal law, White House policy, and or corporate policy, then the principal of “demand destruction” would not be engaged , as it does with retail consumers. And if China joins the infrastructure fray as a way to stimulate its government to offset weak internal consumer growth, prices in the commodity complex will skyrocket.
Rising commodity demand without “demand destruction” (which is more likely if/as domestic oil production and supply is constrained) and the U.S. govt (and it’s contractors) sucking-up domestic labor- both through a national infrastructure plan- is the only way we’ll get structural inflation; and if we do get such a national plan …
the idea of inflation being “merely transitory” will be excised from the conversation.
And it appears that alternative energy development (at the expense of fossil fuels) not only as a political and social and environmental policy, but also as an infrastructure and job creator, is at the top of the Biden and Democrat agendas. It also appears that legislation to mandate the movement of “critical product” supply chains onshore is a priority- making domestic labor even more popular.