Inflation in March was mostly driven by categories already reverting in April. Still, the cool down period could be painfully slow. Here are the categories that will likely lead the way.
The U.S. economy added 431,000 jobs in March and February job estimates were revised higher, pushing the 3 month average gain to 562,000. Unemployment ticked down to 3.6 percent, indicating a tightening labor market.
The Federal Reserve meets this week and in all likelihood will raise short-term interest rates for the first time since emergency levels of monetary accommodation were provided to markets after the COVID-19 shutdowns.
The latest CPI numbers came in around consensus but showed a big 6.6% month-over-month spike in gasoline prices. The longer the Russia-Ukraine war and related commodity crunch continues the more likely headline inflation in March will be over 8% before coming down.
We currently expect the U.S. economy to grow 3.7% in 2022. That is down from the previous 4-4.5% range we predicted but still above trend.
With inflationary pressures running higher than most central bankers are comfortable with, calls for interest rate hikes have become louder.
The Federal Reserve released the meeting minutes from its January FOMC meeting and noted inflation pressures were still too high.
The Federal Reserve ended its two-day Federal Open Market Committee meeting yesterday and there were some notable shifts to monetary policy, although these shifts were largely expected by markets.
Fiscal and monetary policy played big roles in the economic recovery in 2021, but we see 2022 playing out as a handoff—from stimulus bridging a pandemic recovery to an economy growing firmly on its own.
After an upside inflation surprise in October, it’s clear that peak inflation may still be ahead. Here, we look at five signs to watch for over the next several months that may signal that inflation may be near or at its peak.
