Inflation, the old villain of the American economy, is back, raising a great deal of anxiety on Main Street and Wall Street. Over the last 12 months, the interest in U.S.-inflation has gone up from 28 percent to 48 percent on the Google Search (NASDAQ:).

Do you think this is justified anxiety? The answer depends on the story that circulated in the media, the Fed’s or the business stories.

Fed’s Story of Inflation

The Federal Reserve story argues that the recent rise in inflation is a transitory problem. It’s caused by a structural shift in consumer demand from services to commodities, and supply chain bottlenecks, which prevent the supply-side economy from catching up with demand.

Meanwhile, the Federal Reserve thinks that the economy is still well below maximum employment, meaning that there’s plenty of slack in the labor market, which will keep labor costs and inflation under control.

Problem is, the Federal Reserve is not defining what maximum employment means. The Fed doesn’t believe the actual reality of businesses having trouble finding workers contradicts what it believes.

Inflation expected to be tame is also emphasized by the Fed, which uses 10-Year Treasury Constant Maturity Securities BC_10YEAR and 10-Year Treasury Inflation Indexed Constant Maturity Securities TC_10YEAR as indicators. According to market participants, the latest value represents what inflation will be like in 10 years. The breakeven inflation rate was 2.34 percent on September 24, which is not too far from its target of 2 percent.

Business’ Story of Inflation

American corporations argue that inflation is a permanent problem, as higher prices in the supply chain and higher wages begin to take their toll on their top and bottom lines. They are then forced to pass these increased costs on to customers.

For example, Costco (NASDAQ:) said it’s been facing accelerating prices across a range of products in May, including shipping containers and aluminum foil, as well as a 20% spike in meat prices over the previous month.

Last week, the big-box club chain Chief Financial Officer Richard Galanti called freight costs “permanent inflationary items.”

Meanwhile, FedEx (NYSE:) has announced a 5.90 percent shipping rate hike across most of its services, the first significant increase in ten years, to deal with the situation. This could lead to a spiral of price increases as FedEx customers pass on these price rises to customers.

Then there are Lennar (NYSE:), D.R. Horton (DHI), General Mills (NYSE:), and Nike (NYSE:), all of which are reporting cost pressures affecting their business negatively.

The bottom line: there’s a fine line between temporary and persistent inflation that has been crossed, at least as far as the nation’s businesses are concerned.

Disclosure: Panos Mourdoukoutas held positions at Fedex, Nike, and Costco as of the publication.

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