Inflation

S&P 500: Smooth Sailing to Another 2023 High

Jun 1, 2023 2 min read paid

Hooray! The US government won't default on its debts. There are plenty of jobs. Unit-labor-cost inflation is moderating. The banking crisis is abating. The recession is still a no-show. Earnings were better than expected during Q1 and are probably bottoming during the current quarter. The FOMC likely will pause its rate hiking for at least one meeting. AI will boost productivity if it doesn't kill us.

Ed Yardeni

The Economy Is Still Gliding Along

May 28, 2023 2 min read paid

Apparently, the debt ceiling issue has been resolved over the weekend, as we expected. The stock market might rally on Tuesday, but it has been taking the issue in stride focusing more on AI than Washington's political theater. The economy continues to glide calmly as evidenced by Friday's personal income report for April. The Atlanta Fed's GDPNow tracking model raised Q2's real

Ed Yardeni

The Economic Week Ahead: May 22-26

May 20, 2023 2 min read paid

On Friday, Fed Chair Jerome Powell said that monetary policy is "restrictive." So Fed policy will be data-dependent, particularly so on inflation indicators. For those of us in the "pause" camp, he seemed to suggest that's possible. He acknowledged that the banking crisis is bound to tighten credit conditions reducing the need for the Fed to get more restrictive. That's been our

Ed Yardeni

The Economic Week Ahead: May 8-12

May 6, 2023 2 min read paid

Another interesting week ahead. On Monday, the Fed will release the latest Senior Loan Officers Opinion Survey (SLOOS). It is likely to show a further sharp tightening in lending standards, especially for commercial real estate loans (chart). The members of the FOMC had a copy of the SLOOS report at their meeting last week, but decided to raise the federal funds rate nonetheless. They may come to regret their last

Ed Yardeni

Consumer Staples Prices Inflating

Apr 28, 2023 1 min read paid

The good news is that the headline PCED inflation rate fell sharply to 4.2% y/y during March (chart). The bad news is that the core PCED inflation rate edged down to 4.6%. We aren't changing our forecast for headline inflation this year. We are still expecting to see it fall below 4.0% soon and closer to 3.0% later this year.

Ed Yardeni

The Economic Week Ahead: April 24-28

Apr 23, 2023 1 min read paid

This week is jampacked with economic indicators and earnings reports. The BIGGEST numbers will come out on Friday for the PCED and ECI inflation rates. Both should show that inflation remains high but is continuing to moderate. The ECI wage inflation rate was 5.1% during Q4. We know that AHE fell to 4.2% y/y during March (chart). Q1's preliminary real GDP (Thu) is tracking at

Ed Yardeni

Is That Inflation In The Rearview Mirror?

Apr 13, 2023 2 min read

Could it be that the spike in inflation over the past two years was one of the many shockwaves caused by the pandemic? Is inflation turning out to be relatively transitory after all? Goods inflation is certainly looking transitory (chart). Services inflation has been much more persistent, but is likely to moderate during the second half of this year along with rent inflation. Wage inflation may remain troublesome, but less

Ed Yardeni

Inflation, the Fed & Too Much Happiness

Apr 12, 2023 2 min read paid

The S&P 500 fell slightly today despite the better-than-expected March CPI data this morning. Inflation continues to moderate. The headline CPI inflation rate fell from 6.0% y/y in February to 5.0% in March. However, the core rate edged up from 5.5% to 5.6%, but slowing rent inflation is likely to cool this rate in coming months. On Monday, the Federal Reserve Bank of

Ed Yardeni

The Economic Week Ahead: April 10-14

Apr 9, 2023 1 min read paid

The banking crisis is bound to keep investors on edge. This week, the big banks will report their earnings. Last week, in his annual letter to JPMorgan Chase shareholders, Jamie Dimon wrote "the crisis is not yet over." The other executives at the major banks are likely to say the same during their earnings conference calls later this week. The magnitude of their concern will be revealed by

Ed Yardeni

Bond Yields Spiraling Downward

Apr 5, 2023 2 min read

What does the bond market know that the equity market doesn't? The yield on the 10-year Treasury is down from 4.25% on October 24, 2022 to 3.29% today. The S&P 500 is up 8.0% over the same period. Bond investors must believe that the banking crisis will soon morph into a credit crunch and a recession, so inflation will continue to fall perhaps

Ed Yardeni

A Dish of Mixed Nuts

Mar 28, 2023 1 min read paid

Today's economic indicators show that the labor market remains tight, while manufacturing activity remains weak. That mix supports our soft-landing scenario with inflation continuing to moderate and the Fed done (or almost done) tightening. Consider the following: (1) Consumer confidence. The labor market remains strong according to the March survey of consumer confidence conducted by the Conference Board. The “jobs hard to get” response remained very low at

Ed Yardeni

Banking on Inflation Going Downhill

Mar 15, 2023 2 min read

All of a sudden, we are hearing more chatter about deflation. Yes, that's right: deflation. The story line is that the regional banks will respond to the SVB debacle by lending less to lots of middle market businesses, especially if depositors move their funds to the money center banks or to the money markets. The result will be a credit crunch and a hard landing forcing companies to

Ed Yardeni

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