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Higher Inflation Is Here to Stay for Years, Economists Forecast

15 points by harambae 5y ago

nabla9 5y ago
Most economists and certainly the markets, forecast temporarily high inflation then it comes down. Few economists crying inflation always get the press. (Fed's target is 2% average) https://fred.stlouisfed.org/series/T10YIE https://fred.stlouisfed.org/series/T10YIE 10-Year Breakeven Inflation Rate "represents a measure of expected inflation derived from 10-Year Treasury Constant Maturity Securities (BC_10YEAR) and 10-Year Treasury Inflation-Indexed Constant Maturity Securities (TC_10YEAR). The latest value implies what market participants expect inflation to be in the next 10 years, on average."
imtringued 5y ago
I don't see it. Productivity growth is at 5.4%. Wage growth at around 3%. Any demand that cannot be served today will be served in 2022 or 2023 when new production capacity comes online. Demographics don't look good. The trade war tariffs can be reversed if needed. From what I have heard only 25% of the stimulus entered the economy. Assuming 8 trillion stimulus that is only 2 trillion in effective stimulus. It's peanuts as a percentage of GDP. What people call "money printing" by the Fed is literally just the act of filling bank reserves. People used their stimulus to pay off debt, meaning demand for loans is going down. That Fed money isn't entering the economy, it's entering the charts. Volatility in all statistics is 2x what you would expect outside a pandemic. I'll be honest. The inflation news are getting boring. Yes there is inflation today. However, the press just publishes whatever people want to hear and for some reason they want to hear that there is persistent inflation. Feeling inflation is much easier than looking at the boring data. It's easy to turn a housing bubble into "housing inflation" and a stock market bubble into "stock inflation" and then smugly tell everyone that CPI/PCE is wrong or manipulated without even doing something as basic as looking at corporate or rental revenue which do go up, but not as quickly as the stock price. 3% rent inflation is already in the CPI for years... https://youtu.be/1mfLEG1WAMI https://youtu.be/1mfLEG1WAMI https://youtu.be/RWdReNNOx9Y https://youtu.be/RWdReNNOx9Y
- harambae 5y ago
  >It's easy to turn a housing bubble into "housing inflation" and a stock market bubble into "stock inflation" If these bubbles never pop then what would you call them?

15 points by harambae 5y ago

Most economists and certainly the markets, forecast temporarily high inflation then it comes down. Few economists crying inflation always get the press. (Fed's target is 2% average) https://fred.stlouisfed.org/series/T10YIE https://fred.stlouisfed.org/series/T10YIE 10-Year Breakeven Inflation Rate "represents a measure of expected inflation derived from 10-Year Treasury Constant Maturity Securities (BC_10YEAR) and 10-Year Treasury Inflation-Indexed Constant Maturity Securities (TC_10YEAR). The latest value implies what market participants expect inflation to be in the next 10 years, on average."

imtringued 5y ago

I don't see it. Productivity growth is at 5.4%. Wage growth at around 3%. Any demand that cannot be served today will be served in 2022 or 2023 when new production capacity comes online. Demographics don't look good. The trade war tariffs can be reversed if needed. From what I have heard only 25% of the stimulus entered the economy. Assuming 8 trillion stimulus that is only 2 trillion in effective stimulus. It's peanuts as a percentage of GDP. What people call "money printing" by the Fed is literally just the act of filling bank reserves. People used their stimulus to pay off debt, meaning demand for loans is going down. That Fed money isn't entering the economy, it's entering the charts. Volatility in all statistics is 2x what you would expect outside a pandemic. I'll be honest. The inflation news are getting boring. Yes there is inflation today. However, the press just publishes whatever people want to hear and for some reason they want to hear that there is persistent inflation. Feeling inflation is much easier than looking at the boring data. It's easy to turn a housing bubble into "housing inflation" and a stock market bubble into "stock inflation" and then smugly tell everyone that CPI/PCE is wrong or manipulated without even doing something as basic as looking at corporate or rental revenue which do go up, but not as quickly as the stock price. 3% rent inflation is already in the CPI for years... https://youtu.be/1mfLEG1WAMI https://youtu.be/1mfLEG1WAMI https://youtu.be/RWdReNNOx9Y https://youtu.be/RWdReNNOx9Y

harambae 5y ago
>It's easy to turn a housing bubble into "housing inflation" and a stock market bubble into "stock inflation" If these bubbles never pop then what would you call them?