Americans’ personal income increased by 0.6% in December, driving their savings positions higher. The gains, reported by the Commerce Department on Friday, are creating the conditions for what we believe will be a consumer-led boom in the second half of the year. While spending to end 2020 was ... READ MORE >
inflation
FOMC preview: Addressing market rise in inflation expectations
The January meeting of the Federal Open Market Committee this week presents the central bank with an opportunity to reinforce its forward guidance, which is most likely not going to change for years. At the same time, it will provide Federal Reserve Chairman Jerome Powell the opportunity to damp down ... READ MORE >
Inflation-adjusted interest rates, investment and the middle market
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 >
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 >
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 >
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 >
June Consumer Price Index: Inflation not a risk to near-term economic outlook
Rising energy and gasoline prices accounted for roughly half of the 0.6% increase month over month inside the June Consumer Price Index report and should prove transient due to easing demand on the back of an intensifying pandemic. That increase, for the most part, is the recovery in oil and ... READ MORE >
Fed policy bumps up against muted inflation expectations: Data point to ‘lower for longer’ inflation
The Federal Reserve’s April policy meeting featured an in-depth discussion around risks to the economic outlook from falling inflation and current inflation expectations. The central bank’s current policy framework has set a 2 percent inflation target. Meanwhile, core inflation has eased to 1.6 percent, ... READ MORE >