A couple of months ago, there were dire predictions of runaway inflation. As the economy started to heat up in April and May, prices surged and fed fears that inflation would erode the value of the dollar and ultimately mean your paycheck would be able to buy less. The alarms about inflation have been muted over the first half of the summer, however.

There are several reasons for this. One of the most obvious is that we’ve been distracted by other stories. First came the Delta variant surge and then the Afghanistan debacle. It’s well known and understood that the media veers wildly from one story to the next like a pack of lemmings. The inability to focus on more than one subject at a time is one of our national weaknesses. I blame MTV. And TikTok.

But there are other reasons as well. One of these is the Delta variant itself. Economic growth and employment were both strong in July, but those numbers are likely to slow a bit in August. A big part of that slowdown will be the return of some Coronavirus restrictions as well as Americans deciding to hunker down once again on their own initiative.

Additionally, Mark Zandi, chief economist at Moody’s Analytics, explained to CNBC that he believes that growth would begin to slow over the coming months because the easy economic gains have already been made and the economy will now begin to revert to the pre-pandemic mean of about two percent growth. The fiscal stimulus will fade and the low-hanging fruit of the recovery has already been plucked with overall output at about 98 percent of pre-COVID levels.

“Growth has peaked, the economy will slow a bit in the second half of this year, then much more noticeably in the first half of 2022 as fiscal support fades,” Zandi said. “The contours of growth are going to be shaped largely by fiscal policy over the next 18 months. The tailwind just blows less strongly, and may stop altogether by this time next year.”

Already, many of the price spikes of last spring are fading. Oil prices have fallen over the past few weeks and the Energy Information Administration is forecasting that gas prices, which rose due to increasing demand and low inventories, will begin to drop to about 30 cents below their July average. I’ve already noticed lower gas prices in my area.

Likewise, the price of lumber has sharply declined over the past few months after spiking in the spring. Yahoo Finance noted that lumber had increased 377 percent in one year but then lost 74 percent of its value. As the lumber bubble popped, the commodity’s value fell back to 2018 levels.

“Supply and demand dynamics worked as expected,” Home Depot COO Ted Decker told Fox Business.

A lot of people simply got the inflation story wrong as Liz Ann Sonders, chief investment strategist at Charles Schwab, explained to Yahoo Finance. The spring price spikes were largely due to supply disruptions that have mostly been corrected in subsequent months. Most but not all.

"It really is a function of what service or commodity product you're talking about. I think some of those imbalances are probably stickier in nature, not least being semiconductors,” Sonders said.

The semiconductor market is definitely one of the areas that cannot be considered a bright spot. The microchips that power just about everything from toothbrushes to mobile phones to cars continue to be in short supply due to both rising demand and supply constrictions.

The global shortage of semiconductors will continue to constrain production of items such as automobiles and mobile phones. Several automakers have already cut production due to the shortage. Smartphone makers have been working from stockpiled parts for the past few months, but those raw materials and components are starting to run out.

As we all know, when supply is constrained but demand remains high, we can expect prices to rise. Those price increases will apply to many other electronic devices as well, such as video game systems and smart appliances.

Sonders also pointed out that sustained inflation needs both price and wage increases. Companies cannot continue to raise prices if doing so means that their customers can no longer afford to buy their product. However, if prices and wages rise in tandem it can create a wage-price spiral. For this reason, it will be interesting to see if wages continue to rise as the economy settles into a normal pattern.

“When you go through real serious periods of inflation, like in the 1970s, it had a lot to do with the psychology — the psychology of workers willing to ask for higher wages ... [and] companies' willingness to pass on higher costs,” Sonders said. “And there's a psychological aspect to that which is harder to quantify, but something that we have to keep in mind as we think about the longer term implications of what we're seeing right now.”

And, to be fair, there are still those who foresee more widespread inflation. Fox News recently reported on a forecast for more inflation in the second half of 2021 by Advance Auto Parts. Advance’s outlook references Supply-chain disruptions as well as a labor shortage, wage inflation, and higher costs for raw materials.

On balance, however, inflation fears seem to be ebbing. Rapid economic growth is slowing to a more manageable pace and commodities that spiked in the spring are returning to normal levels. Prices for some goods and services will continue to rise over the next few months, but these price increases seem to be tied to specific supply problems rather than more widespread inflation.

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Inflation fears are deflating