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I hate the discourse around inflation - when people say "inflation is down" they are talking about a decrease in the rate of change, not a decrease of an absolute number. This is unlike many other things we talk about in economic life; when the unemployment rate goes down, more people have jobs; when there is a decrease in the mortgage rate, houses cost less, etc. This condition people to think that an economic indicator "going down" means that things are getting better.
This is not the case with inflation. When inflation "goes down," it does not mean that prices are actually decreasing back to the levels that existed prior to the inflation. Deflation is a separate phenomenon that almost never actually happens (and maybe shouldn't be allowed to happen - I'm not smart enough to parse the monetary theory of it all). When inflation "goes down," it means "you're still paying way more for stuff than you were a year ago, but at least the prices aren't skyrocketing up quite as fast anymore; you have some time to rebudget and get used to these new, permanently higher prices."
That statement isn't actually a "good sign" for the economy; at best it means "things aren't actively getting worse." Unless there is some significant increase in productivity to drive prices back down, people are still having to pay more for goods and services than they did previously; their money is worth less and they are poorer now than they were previously. The damage has already been done.
It does mean that things are getting better. We want low and stable inflation. If prices were falling, that would be corrected by the central bank printing more money, which results in an equal increase in wages. It doesn't reduce your purchasing power, but it does help avoid a recession.
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This is actually intended by the Federal Reserve — the typical inflation target is 2%. The reasoning behind this is that money is only useful if it is spent for goods and services — people who make the goods and perform the services will only do so if there is demand for it, and the inflation gives a little nudge to spend money rather than hoard it. Put differently, spending money is equivalent to soliciting work from other people. No spending, no working.
As a counterpoint, the creators of cryptocurrencies typically think that this is a terrible line of reasoning, and therefore created their own money.
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You seem to be confused by the terminology. "Inflation" is the rate-of-change. "Price levels" are the absolute number. Inflation increases price levels, such that price levels can remain elevated even though inflation has decreased.
High inflation really is the enemy more than price levels. High inflation skews lots of things and eats into purchasing power if wages don't keep pace. Price levels are arbitrary, and all that really matters is how much stuff people can buy relative to what they could purchase yesterday (or 10 years ago). This more important phenomenon usually gets shortened to the term "real income", i.e. income adjusted for inflation. As per the sources in the OP and stuff like this, real income is up.
If we had 1000% inflation for a year, and then suddenly returned to stability at ~2% or whatever the target is, would you think that this was a sign of a smoothly running economy?
No because hyperinflation is typically devastating for an economy and can have impacts that take years to resolve. 1000% is Zimbabwe tier.
After several years of regular 2% inflation though, things would mostly get back to normal, minus societal trust issues that 1000% inflation was ever possible in the first place of course. This is assuming that people's incomes mostly kept track with inflation, which usually happens unless there are other economic shocks.
Like funding a bunch of wars or something?
Of course it's a matter of degree, but I don't think "well inflation is back to 2% now, everything's fine" is a good general principle; it might be true, but it might not.
Hardly a new phenomenon. The US was in Afghanistan for 20 years. Ukraine aid is ~6% of the Pentagon's budget.
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