Inflation

As we kick off the week following the July 4th holiday break, the financial markets seem to be settling into an uncertain rhythm. The high-profile nature of the mega-cap stocks is likely to dictate the market’s mood, following the noticeable weak finish on Friday. However, the broader market appears to be stuck in neutral as it remains on the fence. At present, the S&P 500 futures are down by three points, roughly in-line with their fair value. Meanwhile, the Nasdaq 100 futures have fallen by 27 points, trading 0.2% below…

Inflation is currently on everyone’s lips, consumers, investors, policymakers, and economists alike. It has been a prominent feature of the economic narrative since the onset of the COVID-19 pandemic and its consequent global disruptions. Now, as we navigate through the post-pandemic economy, recent surveys suggest that consumers anticipate high inflation in the coming months, with a possible tapering in the years to come. These expectations are being closely watched by the Federal Reserve as it provides insight into the public’s perception of the economy’s health and future trajectory. The principle…

Just as the world was starting to breathe a sigh of relief after the tumultuous impact of the pandemic and Russia’s invasion of Ukraine on food prices, a new threat looms on the horizon. A drought spanning across America’s breadbasket threatens to exacerbate food inflation, further straining consumers’ wallets. The dry spell has affected the wheat fields of the Great Plains and the Corn Belt in the Upper Midwest, leaving some areas with mere fractions of their regular rainfall as we approach crucial growing periods for corn and soybeans. This…

The Federal Reserve (Fed), the central banking system of the United States, currently stands on shaky grounds, grappling with limited options to manage inflation and monetary policy effectively. In the Fed’s semiannual monetary policy report, the focus has shifted to restoring inflation to its 2% target, a task that poses considerable challenges. Achieving this goal could demand a spell of below-trend growth and potential slackening in labor market conditions, underscoring the delicacy of the situation. The Fed’s inflation target is more than just a statistical benchmark. It is a reflection…

What does the Nonfarm Payroll report tell us? The Nonfarm Payroll report, also known as the Employment Situation report, provides detailed information on the employment situation in the United States. This includes the number of people employed (excluding farm workers and some other U.S. workers), the unemployment rate, and wage inflation—the rate of change in wages. It is published monthly by the Bureau of Labor Statistics (BLS), usually on the morning of the first Friday. The Nonfarm Payroll report is closely watched by investors, economists, and policymakers because it provides…

Introduction The Federal Reserve (Fed) plays a vital role in shaping the United States’ monetary policy, and one of its primary objectives is to maintain price stability. To achieve this goal, the Fed closely monitors various economic indicators, with the Personal Consumption Expenditures (PCE) and Consumer Price Index (CPI) being two of the most significant measures. In this article, we will explore the PCE and CPI indices, highlighting their differences and implications for investors. The Personal Consumption Expenditures (PCE) Index Overview The PCE index, published by the Bureau of Economic…

Introduction to Inflation Inflation is the sustained increase in the general level of prices for goods and services in an economy over time. When the price level rises, each unit of currency buys fewer goods and services, effectively eroding the purchasing power of money. Inflation is usually measured as the annual percentage change in the Consumer Price Index (CPI) or the Wholesale Price Index (WPI). Causes of Inflation There are several factors that can contribute to inflation, such as an increase in demand for goods and services, a decrease in…

Stagflation refers to a state of economic conditions characterized by significant inflation, high unemployment, and slow or no economic growth. The term itself is a combination of “stagnation” and “inflation”. Prior to the 1970s, dominant economic theories posited that inflation would increase when unemployment rates were low and decrease when they were high. This theory was based on the Phillips Curve, an economic model that proposed an inverse relationship between unemployment and inflation. However, the prevalence of stagflation in the 1970s and 1980s surprised economists and forced them to refine…

In the past decade, American households have seen a dramatic erosion of their purchasing power. This is largely due to inflation, which has been steadily eroding our buying power for years now. The result of this inflationary pressure is that the middle class in America is struggling to keep up with rising costs of living. From rising food and housing prices to increasing taxes, the burden on the American middle class is becoming increasingly difficult to bear. In this article, we will explore how inflation has had a detrimental impact…

Inflation is a naturally occurring economic phenomenon that occurs when there is an increase in the general price level of goods and services in an economy over a period of time. This increase in prices affects the purchasing power of money, making it difficult for people to maintain their standard of living. Inflation can also have a significant impact on the retirement savings of Americans, particularly those who have invested their savings in 401ks and other retirement plans. The current rate of inflation in the United States has been steadily…