Saturday, 16 May 2009

US inflationary expectations picking up

The US headline inflation rate has come down sharply following the collapse of GDP and the sharp rise in unemployment. However, no one expects inflation to stay low for long. According to the University of Michigan's monthly survey, inflationary expectations bottomed out in January, and they have been rising ever since.

Quantitative easing, the near-zero federal funds rate, and the massive Obama deficit make for the perfect inflatioanary recipe.

1 comment:

Anonymous said...

What sector of the economy has pricing power outside of the light ammo industry? Has the spare capacity or supply been used up in the housing market, commercial real estate market, auto manufacturing plants, existing autos (we have far more than we need on the road already), or the financial industry (which should be shrinking far fast than it is)?

UMI must be surveying economists or other such idiots.