The Economic Insights Channel

A Long-Term Look at Inflation

The Consumer Price Index for Urban Consumers (CPI-U) released Friday puts the year-over-year inflation rate at 2.20%. It is below the 3.76% average since the end of the Second World War and above its 10-year moving average, now at 1.71%.

GMO Quarterly Letter

In a new quarterly letter to GMO's institutional clients, head of asset allocation Ben Inker discusses why investors should be thinking about the risks of surging inflation, even if such a surge may not be inevitable or even probable. Chief investment strategist Jeremy Grantham considers the current market environment and how to most rationally take risk with the ultimate stakes on the line.

NewsLetter – December 2017

Harold Evensky's most recent Newsletter.

The Big Four Economic Indicators: November Real Retail Sales

Note: With today's release of November's Retail Sales and Consumer Price Index, we've updated this commentary to include the latest Real Retail Sales. Month-over-month nominal sales in November increased by 0.8% (0.79% to two decimals). Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, increased by 0.23. The chart gives us a close look at the monthly data points in this series since the end of the last recession in mid-2009. The linear regression helps us identify variance from the trend.

Heading into 2018, International Assets Are Positioned for Outperformance

Heading into 2018, we remain positive on global equities and believe the outperformance of international risk assets can continue. In the years following the Global Financial Crisis, uneven global growth created headwinds for risk assets outside the US. Typically, one or two regions would show improvement, while other regions decelerated.

2018 Outlook Implementation Guide

We prefer to take economic risk in equities over credit given tight spreads, low yields and a maturing cycle. We expect increasing profitability to power equity returns, especially in Japan and emerging markets (EM).

Inflation: An X-Ray View of the Components

Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation. We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.

Another Year, the Same Old Rate Paralysis

Long-term interest rates remain stuck in a range that has defined the last six years. Russ discusses why 2018 may see more of the same.

Chair Yellen’s Last Act

Despite a rate hike, monetary policy remains accommodative.

Fed Delivers Another December Rate Hike

The US Federal Reserve delivered another interest-rate hike at its December monetary policy meeting, marking the fifth such move in its tightening series starting in December 2015.

Weekly Unemployment Claims: Down 11K, Beats Forecast

Today's seasonally adjusted 225K new claims, down 11K from last week's 236K, was much better than the forecast of 239K. From the release: "Claims taking procedures continue to be disrupted in the Virgin Islands. Claims taking process in Puerto Rico has still not returned to normal. "

What Inflation Means to You: Inside the Consumer Price Index

Let's do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.

U.S. Workforce Recovery

We've updated our monthly workforce analysis to include last week's Employment Report for November. The unemployment rate remained at 4.1%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) came in at 228K.

Political Noise, Market Poise

A review of last month’s market-moving events across countries and asset classes.

The Fed, the Job Market, and the Risks

The appointment of Jerome “Jay” Powell as Fed chair should result in a smooth transition for monetary policy into early 2017. However, other personnel changes mean greater policy uncertainty as one looks beyond the middle of next year. This comes at a time when the risks of a policy error are increasing.