As Americans gather among family and friends to celebrate Thanksgiving, we all have much to be thankful for.

Inflation is back and worse than it's been in decades. Consumer prices rose 0.9% in October and are up 6.2% in the last twelve months. Two more months of moderate increases, and the CPI will be 6.5% in 2021, the highest inflation since 1982.

In spite of what listening to the mainstream media might make you think, the voting public doesn't change much from year to year or election to election. As a result, when leaders try to take policy too far in one direction, without enough public support, they often get punished at the polls.

The Federal Reserve today announced the (much-overdue) start to tapering, which means it will continue to increase the size of its balance sheet, but not quite as fast. Starting later in November, the Fed will reduce its monthly pace of asset purchases to $105 billion per month from the current rate of $120 per month.

Investors will be focused on the Federal Reserve this week and our expectation is that it will finally announce an overdue tapering of quantitative easing. In addition, we expect Chairman Jerome Powell to make it clear in the press conference that he expects tapering to be completed by mid-2022.

When the US fell into the COVID crisis, the federal government went on a massive spending binge. Pre-COVID, in the twelve months through March 2020, federal outlays were $4.6 trillion, or 21.4% of GDP. In the next twelve months outlays soared to $7.6 trillion, or 36.2% of GDP.

Politics today is in large part about pitting one group against another and convincing one side they've been treated unfairly. One of those groups is the younger generation of workers known as Millennials, who are supposedly up to their eyeballs in debt and lagging well behind prior generations.

In 2009, after overly strict mark-to-market accounting rules were altered, we said the Financial Crisis was over. It was hard to get our voice heard, though, because both sides of the political aisle were busy saying the economy stunk.

No changes to monetary policy today, but plenty of changes to the outlook for monetary policy in the next few years.

Prior to today, the S&P 500 index was down four days in a row, and many market observers are blaming China, specifically the recent news about Evergrande, a major Chinese real estate company that looks to be heading to default on its loans.

Some analysts and investors breathed a big sigh of relief on inflation when it was reported last week that the Consumer Price Index rose 0.3% in August versus a consensus expected 0.4%. But we think any sense of relief is premature.

If you've read our two most recent Monday Morning Outlooks, you know we raised our forecast for the S&P 500, but lowered our forecast for real GDP growth. How can that be?

In early 2020, when COVID hit, the unemployment rate in the United States was 3.5%, wages for low-income earners were rising faster than wages for high-income earners, living standards were rising...the economy was on a roll.

We've been consistently bullish on stocks since 2009. This bullishness has paid off, although not every year; stocks fell in 2015 and 2018.

Narratives get more energy these days because of social media and cable TV, but they've always existed.

As we wrote last week, it's not possible to analyze the economy these days without focusing heavily on what government is doing.

In an ideal world, analysts and investors wouldn't have to spend much time, perhaps none at all, trying to manage around changes in government policy.

Last week, the government reported real GDP in the US grew at a 6.5% annual rate in the second quarter and was up 6.4% at an annual rate in the first half of 2021.

It's the question that parents around the world know all too well, "Are we there yet?" That was the key question coming into today's Fed meetings. The answer? Not yet, but we're getting closer.

Someone once said, "technology has never moved this fast, and at the same time, will never move this slow again."

Another quarter for consumers to rely on massive stimulus payments, extremely loose monetary policy, and the continued re-opening of the US economy combined to push real GDP up at a very rapid pace in the second quarter, with the federal government preparing to release its initial estimate of economic growth on July 29.

Many are convinced that a US stock market correction, or even a bear market, is inevitable. So, when the S&P 500 was down 1.6% last Thursday, many thought it had arrived.

Many analysts have been thinking and writing about the "twin deficits" and whether the record-breaking size of those two deficits, combined, mean the US dollar is about to plummet versus other currencies.

One of the key decisions President Biden will make later this year is who is going to run the Federal Reserve for the next four years.

As expected, the Federal Reserve made no significant changes to monetary policy today.

To drive home his commitment to easy monetary policy and low interest rates in mid-2020, Federal Reserve Chairman Jerome Powell declared the Fed was not even "thinking about thinking about raising rates."

We keep hearing people make comparisons between this recovery and those of the past as if it's apples-to-apples.

Talk about revisionist history!

Inflation is running hot.

The US economy is recovering rapidly from the COVID-19 disaster.

One of the best economic debates that's happening right now isn't between Republicans and Democrats or liberals versus conservatives, it's between policymakers who want to go full steam ahead with as much fiscal and monetary "stimulus" as possible and center-left economists who worry about the economic effects of over-stimulating the economy.

President Biden and Congress agreed to a roughly $2 trillion stimulus back in March and are now contemplating two new additional multi-trillion dollar pieces of legislation, on both infrastructure and social spending, as well as some massive tax hikes

Nobody expected the Fed would lift interest rates today

Mix extremely loose monetary policy, a federal government cutting checks like it’s going out of style, and extensive roll-out of the COVID-19 vaccines, and what do you get?

The S&P 500 fell almost 50% between mid-February and mid-March 2020, during the initial stages of the pandemic.

Housing prices have soared in the past year. The national Case-Shiller index is up 11.2% in the past twelve months, the largest gain since 2005-06.

When the scientists said “15 days to slow the spread,” some of us actually believed that by Easter the shutdowns would end.

You've got to hand it to the Federal Reserve. With the cleverness of a seasoned head coach – think Jim Boeheim leading Syracuse in the NCAA basketball tournament – they figured out how to accomplish a great deal while making it look like they didn't have many tools at their disposal.

At its most recent meeting the Federal Reserve made no changes to monetary policy and minimal changes to its statement, simply acknowledging that some economic indicators have "turned up" recently while also noting that inflation remains below 2.0%.

We believe inflation is still, and always will be, a monetary phenomenon. It is defined as "too much money chasing too few goods and services" – but that doesn't mean every period of higher inflation is going to look exactly the same.

The Full Employment and Balanced Growth Act of 1978 gave the Fed a “dual mandate” – to promote maximum sustainable employment and stable prices. Over the years, the meaning of these two mandates has changed.

Those of us who are concerned about inflation increasing faster than the Federal Reserve anticipates are focusing on the rapid increase in the M2 measure of the money supply.

After receiving the genetic sequence of the novel coronavirus from China, it took Moderna just two days (two days!!) to generate the sequence of the vaccine. In less than a month, they produced the first clinical batch of the mRNA-1273 vaccine that has now seen tens of millions of doses distributed.

Things are looking up for the US economy. Later this week we'll get an update on real GDP growth for the 4th quarter of 2020. We estimate that'll be revised up to a 4.3% annual rate of growth from a prior estimate of 4.0%.

Ever since the stock market bottomed in 2009 during the financial crisis, people have been coming up with reasons why the bull market was about to end. We heard every reason – Brexit, the end of Quantitative Easing, too much debt, COVID, etc. – and while we understood each may be a cause for consternation, we focused on valuations, which suggested the bull market would continue. Over time, math wins.

Inflation is not dead. It is not gone. It has not been tamed. We know it seems like it, especially after the past few decades which generated in many an "inflation-complacency" that feels justified. After all, following the 2008 Financial Panic, many predicted Quantitative Easing would cause hyper-inflation.

Yes, 2021 is starting off as crazy as 2020. They don't agree on the Green New Deal, or Socialism, but Ted Cruz and AOC both agree that limiting investor access to markets is a mistake. In case you missed it, last week, Robinhood, a new online trading platform that marketed itself as democratizing investment, stopped investors from buying certain stocks.

Beyond the annual rotation of voting members on the Federal Open Markets Committee (FOMC), there wasn't change in today's Fed statement. While acknowledging the moderation in some recent economic data, and that weakness is concentrated in areas most directly impacted by the pandemic...

The budget deficit for fiscal year 2020, which ended 9/30/2020, was $3.1 trillion, the highest ever on record in dollar terms, and the highest relative to GDP since World War II. This year the deficit will be even larger.

The double-dip recession so many feared didn't arrive in the fourth quarter of 2020, and it certainly doesn't look like it will happen in early 2021, either.