Inflation & The Consumer

Inflation remains high and persistent (and well above the Fed’s long-term 2% target rate), outpacing wage growth and crimping consumer spending power. The U.S. and other economies face an untested path toward normalization. This is the world’s first recovery from a pandemic in more than 100 years and there is no clear playbook.

Parts of the economy are already in a recession, and the probability is high that the rest of the economy will follow in 2023 given the Fed’s resolve to reduce inflation toward its long-term goal. Almost all past tightening cycles have eventually led to a recession. There remains a risk that the Fed could tap the brakes too hard and force the economy into a deeper-than-expected recession.

What we’re watching

• Consumer Behavior
• Pricing Power
• Inventory
• Labor
• Supply Chain Costs
• Food
• Energy
• Semiconductors