It’s time for a break from the regular-scheduled non-stop talk about the Iran war and Nasdaq because I’m increasingly worried that the US is headed for an inflation problem.
It’s time for a break from the regular-scheduled non-stop talk about the Iran war and Nasdaq because I’m increasingly worried that the US is headed for an inflation problem. It’s some consolation that Powell will stick around as a Fed Governor but I think there is a chill on the Fed and it’s reluctant to raise rates.
If that remains the case throughout this year when it becomes increasingly obvious that they’re behind the curve, then it risks compounding the problem. Fed funds futures are pricing in just 2.2 bps in hikes this year and 9 bps through mid-2027. The underlying economy is iffy and that’s certainly not inflationary.
Real disposable income was up 0.4% y/y through March and that’s not exactly conducive to consumer spending but the wealthy and stock market gains are promoting spending. In terms of inflation, the picture alone tells a worrisome picture after Friday’s PCE report. Here are the things I’m worried about: 1) War costs This is most-obviously oil but it’s also fertilizer and some other inputs.