Inflation, public enemy No. 1 in the 1970s in the United States, appears to be regaining its former title in the first decade of the 21st century.

But is it here to stay? That depends on the data you're looking at, most economists agree. U.S. inflation is trending higher, but whether it is more structural or cyclical (simply a product of current demand conditions), is the focus of debate in economics circles.

Structural view

Economist Peter Dawson says structural changes are occurring that will keep inflation well above the U.S. Federal Reserve's 2-2.5% comfort zone for years. Those changes include strong demand for commodities in both emerging and developed economies, the U.S. budget deficit and trade deficit, and the weak U.S. dollar.

"What we're seeing today, in my view, is a new economic age. It's not a cliché. We have more than half the world developing at the same time and it has and will continue to place pressure on commodity prices, oil being the first, but now grains / food stuffs and minerals following close behind," Dawson said. "This is creating a whole new cost layer not only in the U.S., but around the world."

A classic market theorist, Dawson does expect higher prices to do what they're supposed to do, eventually: reduce demand. However, with regard to grains, it's difficult to predict the level at which demand will ebb, due to government subsidies. Meanwhile, oil, he said, "is reaching its zenith, probably at $125 per barrel." Further, Dawson believes a sustained $100 oil price will "propel the development of cheaper, alternative energy sources in the next decade" that will enable sufficient global economic growth. But until commodity demand cools and new energy forms arise, you can expect above-average inflation, both in the U.S. and globally.

Cyclical view

Economist David H. Wang takes a more cyclical outlook to inflation. Of course, no two business cycles are identical, but Wang nevertheless does see many parallels between the 1970s stagflation period and today. While noting that the second oil shock, 1979-80, like the first in 1973-74, differed from the current oil shock in that they were supply-based, as opposed to today's demand-based circumstance, all three were characterized by the United States' energy profligacy immediately before it. And each time the U.S. had to rely on imports to meet more than 50% of its daily oil requirement. In the first two shocks, record-high oil prices accelerated inflation. Wang believes history is repeating itself today.

"Developing world oil demand is a major factor in oil's record price today, but the question remains, would the U.S. have been in this predicament if its auto fleet averaged 35 or 40 miles per gallon? And had it committed more seriously to mass transit and increased energy efficiency?" Wang said. "Most likely, the answer is no."

Hence today's rising inflation, in Wang's interpretation, is largely cyclical, a product of both record-high oil prices and that aforementioned failure by the U.S. to think down-the-field regarding energy policy.

In sum, for Dawson, today's rising inflation is largely structural, caused by globalization, and eventually the market will impose solutions. For Wang, today's rising inflation was a condition the U.S. knew could appear again at some point, and one that it could have prepared for better.