Issue 19 – Inflation Is Red Hot, But Not Structural

A Snapshot of the Market for the Week Ended May 14, 2021:

Reports on inflation provided unpleasant surprises. In the first three days, the inflation narrative was in full swing. The media said that worldwide stimulus shock and supply disruptions are producing inflationary pressure everywhere. If one were to look at Google Trends, the search for inflation is at its highest ever and mentions of it on corporate earnings calls were up 800% from a year ago. According to the University of Michigan’s consumer sentiment index, it tumbled in early May because year-ahead inflation expectation surged, jumping to 4.6% from 3.4% in April while long term expectation rose to 3.1%. Clearly, workers and businesses are aware of what is going on: the Atlanta Fed’s Inflation Expectations survey showed that firms are predicting an overall price increase of 2.8% over the coming year.


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By Hubert Marleau

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By Hubert Marleau

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