A graphic provided by FRED shows real personal consumption expenditures. Overall demand still isn’t that high, but demand has been skewed: In the pandemic era, people have been consuming fewer services but buying a lot of durable goods — home appliances, exercise equipment, etc., writes writes New York Times columnist Paul Krugman.

Early this year, some prominent economists warned that President Joe Biden’s American Rescue Plan — the bill that sent out those $1,400 checks — might be inflationary. People like Larry Summers, who was Barack Obama’s top economist, and Olivier Blanchard, a former chief economist of the International Monetary Fund, aren’t unthinking deficit hawks. On the contrary, before COVID hit, Summers advocated sustained deficit spending to fight economic weakness, and Blanchard was an important critic of fiscal austerity in the aftermath of the 2008 financial crisis.

But Summers, Blanchard and others argued that the rescue plan, which would amount to around 8% of gross domestic product, was too big, that it would cause overall demand to grow much faster than supply and hence cause prices to soar. And sure enough, inflation has hit its highest level since 1990. It’s understandable that Team Inflation wants to take a victory lap.

When you look beyond the headline number, however, you see a story quite different from what Summers, Blanchard et al. were predicting. And given the actual inflation story, calls for the Federal Reserve to raise interest rates to cool off the economy look premature at best.

First, overall demand hasn’t actually grown all that fast. Real final domestic demand (“final” means excluding changes in inventories) is 3.8% higher than it was two years ago, in an economy whose capacity normally expands about 2% a year.

It’s true that the Great Resignation — the unwillingness of many Americans idled by COVID-19 to return to the labor force — means that labor markets seem very tight, with high quit rates and rising wages, even though GDP is still below its pre-pandemic trend. So supply is lower than most economists (including Team Inflation) expected, and the economy may indeed be overheated.

But everything we thought we knew from the past said that while overheating the economy does lead to higher inflation, the effect is modest, at least in the short run. As the jargon puts it, the slope of the Phillips curve is small. And those rising wages aren’t the main driver of inflation; if they were, average wages wouldn’t be lagging behind consumer prices.

So what is going on? The Bank for International Settlements — a Switzerland-based institution that is sort of the banker to the world’s bankers and has a formidable research team — argues that it’s largely about the bottlenecks, the now-famous supply chain snarls that have ships steaming back and forth in front of Los Angeles and factories shut down for lack of chips.

What’s causing these bottlenecks? Overall demand still isn’t that high, but demand has been skewed: In the pandemic era, people have been consuming fewer services but buying a lot of durable goods — home appliances, exercise equipment, etc.

This surge in demand for durable goods has overstressed the ports, trucking and warehouses that deliver durables to consumers, leading to rapidly rising prices for stuff whose prices normally fall over time as technology advances.

In other words, it seems to be the pandemic skew in demand, not excessive spending across the board, that’s driving current inflation.

Once you realize this, it has major implications both for our understanding of the recent past and for future policy.

First, because inflation reflects the huge surge in demand for durable goods, not the much slower growth in overall demand, a smaller Biden spending plan wouldn’t have made much difference. Even if demand had been a point or two lower, the rush to buy stuff as opposed to services would still have overwhelmed our logistical capacity.

Second, because inflation reflects bottlenecks rather than a general problem of too much money chasing too few goods, it should come down as the economy adjusts. Inflation hasn’t been as transitory as we hoped, but there is growing evidence that supply chains are getting unkinked, which should eventually provide some consumer relief.

Finally, even if inflation stays elevated for a while, do we really want to slow the whole economy because bottlenecks are causing some prices to rise? One way to describe the argument of inflation hawks is that they’re saying that we should eliminate hundreds of thousands, maybe millions of jobs because the docks at the Port of Los Angeles are congested. Does that make sense?

Now, matters would be quite different if we saw signs of a 1970s-type wage-price spiral. But so far we don’t. And for the time being, at least, policymakers should have the courage to ride this inflation out.

Paul Krugman is an economist and a New York Times columnist.