inflation

Output Gap Most Negative Since 1980

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This article will pack in as many economic signals as possible without it being too overwhelming. The list below shows 5 groupings of indicators which tell us the likely future performance of the consumer. The situation looks great as 17 out of 18 indicators are favorable and only one is…CONTINUE READING

World Trade Growth Expected To Decline From 4.9% To 3.7%

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The Personal Income and Outlays report is widely followed because it provides information on the two most important factors in macroeconomics: inflation and consumer spending. Even though it is delayed, the Fed watches this inflation reading the closest, thus making it very important. Month over month August PCE inflation was…CONTINUE READING

Housing Market Declines First Time Since 2011

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The most curious part of the economy is that while GDP grew 4.3% in Q2 and consumer sentiment is near a record high, the housing market has weakened. We will delve into the weakness in this article. To be clear, you should try to avoid recency bias in which you…CONTINUE READING

Inflation Falls: Is The Economy Even Late Cycle?

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As we previously discussed, real wage growth is becoming a reality, having appeared in August. Average hourly earnings were up 2.9% and weekly earnings growth was 3.2%. Inflation stats have come in below expectations as we will discuss in this article. Before we get to that, it’s worth noting that…CONTINUE READING

The Next Recession Could Be In 2019

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With Q2 S&P 500 earnings growth at 26.58%, core PCE inflation only at 2%, and small business optimism at the highest level in the 45 year history of the NFIB survey, there’s not much reason to be bearish on equities in the intermediate term. The biggest concern in the next…CONTINUE READING

Link Between Inflation & Output Gap

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The output gap is the highest since the 1970s suggesting that inflation should be significantly increasing in the coming years. However, can the two indicators both be correct, with there being subdued inflation as measured currently and with the economy above its potential?

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Is Real Fed Funds Rate Peaking?

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Q2 GDP growth was revised higher from 4.1% to 4.2% even though the estimate for real consumption growth was revised lower from 4% to 3.8%. That being said, the consumer had a strong rebound from Q1 and still drove GDP growth to an amazing result. The obvious question is whether…CONTINUE READING

What Amount of Inflation Is Good?

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The way you interpret the economic data released in the PCE and ECI reports depends on if you fear inflation or an economic slowdown more. It’s not an easy decision to make because on the one hand, the labor market is tightening and the cycle is probably near its end.…CONTINUE READING

Gold vs Inflation: Not What You Expect

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We’ve had some readers question the Fed’s use of CPI as a measurement of price inflation. The chart below might satiate them as it shows the eight components of CPI. Medical costs have pushed inflation higher. Keep in mind, this is over a 17 year period. We’re not ignoring the…CONTINUE READING

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