Inflation Outlook

09.18.20

Chart of the Week – Inflation Outlook

A recent CNBC survey found, on average, economists believe the Federal Reserve will keep the federal funds rate near zero until February 2023. Given the extraordinary amount of fiscal and monetary stimulus recently, should we worry about inflation?

We agree that the Fed will be on hold for an extended period, possibly longer than the average survey results predict. However, we are not worried about inflation gaining traction anytime soon. Tightness in industrial and labor markets are typically drivers of inflation. The economic recovery has a long way to go before recovering to pre-pandemic levels.

Input Markets Show Slack in the Economy
Chart Showing  Labor Situation
Chart Showing  Labor Situation

Source: DOL, BEA, Bloomberg. Seasonally Adjusted data shown is from September 2005 through September 2020. This chart is being provided as a general source of information for education purposes only, and is not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy.