This research was published on November 8th, 2021 in Fortune.

After a summer hiatus, inflation fears are back with a vengeance. Repeated high inflation prints seemingly support the doomsayers’ case. To them, the Federal Reserve has already committed a serious “policy error” — a misreading of the data that will allow prices to spiral out of control. To complicate matters, politics is injecting itself in an uncomfortable way. A political decision is looming about Jerome Powell’s reappointment — or replacement — allowing the topic of the Fed’s political independence to cast a shadow over the inflation debate just as we approach a midterm election year.

To gauge whether the current path could return the U.S. economy to a world of structurally high inflation, last seen in the 1970s and early 1980s, it is helpful to spell out a set of scenarios. While a structural regime break is one possible outcome, it remains a far smaller part of the risk distribution than headlines might make one believe.