A confluence of events and policy shifts has coalesced into a unique opportunity for middle market firms to make long-term strategic investments in their firms. Interest rates, once adjusted for inflation, reside in negative terrain. This implies that firms should take advantage of those historically low ... READ MORE >
Search Results for: inflation
CHART OF THE DAY: Inflation poses little risk to the U.S. economic outlook
The inflation rate ticked up to 1.4% in December and the yield on 10-year Treasuries remained above 1% for the sixth straight day on Wednesday. These levels should be considered small victories in the normalization of the economy after a rough nine months of the pandemic. At this point, rent for ... READ MORE >
CHART OF THE DAY: A key measure of future inflation implies disinflation risks
The Federal Reserve’s preferred forward-looking inflation metric -- called the five-year, five-year forward break-even inflation rate -- implies that pricing risks to the economic outlook revolve around disinflation, not inflation, over the next 10 years. The metric -- which measures the expected ... READ MORE >
CHART OF THE DAY: Consumer Price Index shows little risk of inflation
The long shadow of the pandemic-induced shock continues to hang on the economy. The tone and tenor of the data continue to imply that the central bank and the fiscal authority have enormous space to sustain accommodative monetary policy and address the intensification of the pandemic in the near term, not ... READ MORE >
Monetary policy and inflation in the modern era
The Fed is embarking on a new era in monetary policy, switching from its point target of 2% inflation to a target range of 1% to 3%. This change is predicated on longer-run structural changes in the economy that are inherently disinflationary, a real neutral interest rate near zero and much slower growth ... READ MORE >
Savings, the money supply and inflation during a pandemic-induced recession
During the dark ages of economics, the quantity theory of money held forth that the amount of money swooshing through the economy determined everything from inflation to economic growth. An excess supply of money available to the public would chase a limited supply of goods, inducing higher inflation and ... READ MORE >
Consumer Price Index: Modest increase in prices, inflation expectations well anchored
Strong demand for transportation and energy, which increased by 1.3% and 0.9% in August, were the primary catalysts for the 0.4% increase in the Consumer Price Index. The all-important core CPI excluding food and energy rose by a similar amount. On a year-ago basis, prices climbed a muted 1.3% and ... READ MORE >
CHART OF THE DAY: Middle market retailers pay close attention to inflation as pandemic progresses
A simple visual demonstrates a critical truth for middle market consumer products companies that will be even more critical in the wake of the pandemic, particularly if the economy enters a prolonged period of deflation. Costs among the different sectors within the consumer ecosystem can diverge sharply ... READ MORE >
Major policy shift at the Federal Reserve: average inflation targeting
Federal Reserve Chairman Jay Powell on Thursday announced a significant shift in the central bank policy regime that moves away from its long held Phillips Curve-based trade-off between employment and inflation. This will provide the Federal Reserve more room for accommodation in an era of zero interest ... READ MORE >
CHART OF THE DAY: Pipeline pressures remain muted amid inflation fears
Headline consumer and producer prices in July both exceeded consensus expectations, prompting worry about rising prices. The University of Michigan consumer sentiment survey of five-10-year inflation expectations is at 3%, the highest level since 2016 as the global pandemic has impacted a wide array of ... READ MORE >