The Federal Reserve is on the verge of achieving that rarest of economic feats: A soft landing. The rapid disinflation that the Fed has engineered over the past two years mirrors that of the 1990s—the last time the central bank achieved such a difficult feat. That disinflation set the stage for a ... READ MORE >
Inflation
Producer inflation topped forecasts in January, led by food and energy prices
The producer price index (PPI) rose by 0.4% in January, following an upwardly revised 0.5% increase in December, making it the hottest two-month stretch of inflation since February last year. The main drivers were food and energy prices, which rose by 1.1% and 1.7%, respectively. Excluding those ... READ MORE >
Inflation accelerates in January amid concerns about rising expectations
Strong aggregate demand driven by job gains and rising real wages that in turn supported robust demand for services, rents and energy resulted in a 0.5% increase in the top-line consumer price index in January and a 0.4% advance in core inflation. A year-ago basis, the index increased by 3% and core ... READ MORE >
Market minute: The problem of sticky and stubborn inflation
The consumer price index for January, which will be released this morning, will most likely reaffirm that service sector inflation remains sticky and stubborn amid strong job and wage gains that are the primary drivers of aggregate demand. While housing inflation is easing, owners’ equivalent rent ... READ MORE >
U.S. households show robust gains on spending and income
Further evidence of robust household income and spending growth was on display inside the December U.S. personal income, spending and PCE report released on Friday. In a separate report, the Employment Cost Index increased by 0.9% in the fourth quarter with overall compensation increasing by 3.8% and ... READ MORE >
To understand rising rates and volatility, look to regime change in global economy
Over the past three years, the core analytical framework we have used to understand the post-pandemic economy is that a fundamental structural shift, or regime change, is taking place. It's this shift that explains why long-term interest rates have been rising even as the Federal Reserve has ... READ MORE >
Inflation improvement stalled in December ahead of price increases
Stalled improvement in the December consumer price index appears to be the growing consensus among policymakers and investors as they await turn-of-the-year price increases. The expected adoption of expansionary fiscal policies, as well as greater restrictions on immigration, are pointing toward ... READ MORE >
Identifying countries at risk as the U.S. dollar surges
Over the past year the real trade-weighted dollar index has appreciated 6.88% because of a combination of interest rate differentials, strong growth and expectations of reduced regulation, lower taxes and increased government spending. With these trends showing no sign of easing, the greenback will ... READ MORE >
Stubborn inflation not stopping the U.S. consumer from spending
Stubborn and sticky inflation did not prevent the American consumer from tapping rising real incomes in November as the economy approached the traditional holiday season. Personal income increased by 0.3%, personal spending by 0.4% and real spending by 0.3% as households used the 1.1% increase in ... READ MORE >
Inflation risk premium suggests higher yields ahead
As the yield on the 10-year Treasury advances toward 4.5%—which is our baseline forecast for next year—the inflation risk premium is supporting that move. The inflation risk premium is the compensation that investors demand for the possibility that inflation may rise, or fall, and that premium is ... READ MORE >