Markets Reverie

  If you’ve been reading the news lately, there has been a lot of noise about the rising inflation, especially in the US. In May 2021, the US CPI rose by about 5%. The Fed (Federal Reserve System) currently doesn’t seem fazed by the rising inflation, as they believe that this period of inflation is only occurring due to transitory factors. However, it seems that consumer’s see things differently, as can be seen with recent consumer survey results showing that median inflation expectations for the next 12 months is 4.8%. These survey results come from the New York Fed’s Survey of Consumer Expectations. It should be noted that 4.8% is considerably higher than the Fed’s prescribed healthy inflation rate of 2%.  It should be noted that expectations for high unemployment a year from now have a reached a new low of 30.7%, which indicates that the chances of stagflation are low. Before I discuss any further about the situation with current rising inflation, let’s break down what inflation i