It's All About Inflation
MIG’s broad thesis for the 2017 US economy is: Solid growth and squishy inflation. The growth part of this has been supported by strong job creation as confirmed by the recent NFP report.
The soft consumer inflation portion of our thesis has yet to be tested and is critical. It is a key factor in keeping the Fed on hold through the first half of the year as we expect. There are several compelling reasons to support our view of softer consumer inflation in the next few months:
- The recent boost from soaring gasoline prices has reversed
- Base effects favor a slower pace of core inflation
- Little inflationary pressure form rising wages
Our soft inflation call will be tested next week with Wednesday’s release of CPI data for January. MIG expects annual core CPI inflation to remain unchanged at 2.2% or to decline slightly.​
MIG provides investors with clarity on markets, macro and monetary policy. It combines a rigorous analytical approach with unique insight into central banks based on over a decade of experience. Clients appreciate our clear and accessible communication style
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