Two Fed Charts to ponder. Does today’s data rhyme with the…
- …(cue scary music here) terrible horrible 70’s when inflationary blight stalked the land?
- …(cue “I want my MTV…”) the 1990’s ? The 1990’s were a pretty good decade.
Today’s data kinda maybe rhyme with the 90’s?:
- inflation running at 3%-4% (or 4%-5% depending on the data series) and trending down. 10 Year inflation expectations are now at… 1.8%.
- Low unemployment. Strong wage growth.
- Solid GDP growth.
- anticipating major technology-led growth (Cloud and AI)
OK, inflation isn’t at the Fed’s (arbitrary) 2% target. But expectations are pointing us that way. We also weren’t at 2% in the 1990’s either. Was that so horrible?
Not making a prediction here. But worth giving the non-doom scenario some thought…
1981 to 2004 – PCE Inflation, Unemployment, and GDP growth Rates. Inflation trending down.
1960 to present: The doomsayers have been arguing we are replaying 1965-1970. But what if we’re in 1983 or 1989? OR 1996? Inflation expectations are well-anchored. The supply shocks that drove inflation are (mostly) fading.
Also re-posting a link to my last piece here – a pasted chart in my last e-mail went out as a string of gobbledyook. Here’s the (hopefully) Wclean version.