Shelter Inflation
The welcome news this summer is that the overall rate of inflation is easing up, both in the U.S., where it has dropped to its lowest level in over two years, and to a lesser extent, in Canada, where in July, Canada’s inflation rate fell to 2.8 percent. Gasoline is pulling the inflation rate down, while food and mortgages were pushing it up. How has the U.S. housing market responded to the rise in interest rates? How do recent trends in the cost of house prices and rents affect the likelihood of future shelter inflation? “Various market indicators, including house […]
Ask the Fed
“The Fed is trying to achieve price stability and maximum employment,” said Sylvain Leduc, Executive Vice President and Director of Research of the U.S. Federal Reserve Bank of San Francisco (FRBSF), known informally as “the Fed.” In terms of employment levels, “we are back to where we were pre-pandemic.” He was speaking on February 7, 2023, at a public briefing in which he outlined the FRBSF’s thinking on economic matters. He showed a graph of unemployment, which reached a peak at the start of the pandemic in early 2020. The monthly change in nonfarm payroll employment had a downward arc. “Job […]
Chemistry and the Economy
Risks are multiplying and becoming more complex. The chemical industry is intrinsically connected to the economy. Can chemistry help solve the biggest crises facing us today? On December 15, 2022, the American Chemical Society hosted a virtual webinar, “Chemistry and the Economy.” The moderator was Bill Carroll, principal of Carroll Applied Science, who spoke to Paul Hodges, chairman of the Swiss-based strategy consulting firm New Normal. In speaking about risks, Hodges does not beat around the bush. He began with what he called “the four horsemen of the apocalypse.” He stated, “First there was the pandemic and associated supply chain […]
Inflation & Wage Growth
As the U.S. economy emerges from the pandemic, inflation has been climbing. What effect has this had on average wages? Will it be a long-lasting effect? Recent research by leading economists at the Federal Reserve Bank of San Francisco (FRBSF) dives into these questions. “Our findings show that, since the pandemic, inflation expectations have been playing a more prominent role in wage-setting dynamics than in the past,” say the four authors of a paper released on September 6, 2022. Òscar Jordà is a senior policy advisor, Fernanda Nechio is a vice president, and Celeste Liu and Fabián Rivera-Reyes are both […]
But What About Inflation?
Now that the worst of the Covid pandemic appears to be over for North America, inflation has kicked in and investors everywhere are on guard. Is the inflationary trend here for the long term? What, really, lies at the root of this particular instance of inflation? Moreover, what is the best hedge against inflation? On April 4, 2022, James Montier, a member of the Asset Allocation Committee of the CFA Society of Toronto, gave a one-hour webinar on “Hedging Inflationary Risk.” He is the author of three market-leading books: Behavioral Finance: Insights into Irrational Minds and Markets, Behavioral Investing: A […]
Finding a New Balance
How can monetary policy achieve price stability and full employment objectives in the midst of a changing economic environment? Lately, the US Federal Reserve Bank (FRB) has been thinking hard about new ways to control inflation, given the new economic headwinds. “Persistently low inflation presents a new problem for monetary policymakers,” said Mary C. Daly, president and CEO of the Federal Reserve Bank of San Francisco (FRBSF). On August 29, 2019, she gave a speech to a conference of economists and policymakers in Wellington, NZ. This was a significant venue, because inflation targeting was pioneered in New Zealand in 1990, […]
“Worse Than Silverfish”
Some authors go to great lengths to make their monographs up-to-the-moment. In this excerpt, the authors refer to a popular and critically acclaimed TV series. It’s a calculated risk. They use an obsession of the (fictional) characters—the money they are amassing—to tie into the very real phenomenon of hyperinflation. Today’s excerpt comes from page 103 of the book The Evolution of Money by David Orrell and Roman Chlupaty (Columbia University Press, 2016). “To visualize how hyperinflation can affect one’s personal savings, fans of the TV show Breaking Bad will recall the episode in season 5 in which it is shown […]