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Inflation: Temporary or Here to Stay?

| November 11, 2021
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As we approach the kickoff of the holiday season, we wanted to wish you a peaceful and joyful time with the ones you love. Judy, Amy, Garrett, and I are so thankful to have you as partners and appreciate your trust and friendship, as we continue to navigate uncertain times.

I wanted to highlight a current debate on whether October inflation numbers have peaked and are transitory or the beginning of something that is here to stay. Our partners at LPL research outline the challenges ahead for the Federal Reserve, we thought it would be a timely share. 

  • Higher than expected October Consumer Price Index (CPI) data released yesterday by the Bureau of Labor Statistics surprised the equity markets with most major U.S. indices ending the day down. 
  • Rents, which count for more than 40% of the overall calculation, rose at its sharpest monthly rate since 2006 and is regarded as being more persistent, or ‘sticky’, than other components. Historically, a tightening job market like we have now has put further upward pressure on rent prices.
  • Supply challenges remain. For example, a record 111 container ships are waiting to unload at the ports of Long Beach and Los Angeles. Demand is strong as the Delta variant surge subsides, leading us to believe that we may not have yet seen “peak inflation.”
  • All of this will put further pressure on the Federal Reserve Chair Jerome Powell to clarify how long and how high inflation must be before it can no longer be considered transitory.

Cheers!

Jay


Click Here for LPL Research 11/11/221 


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