Our clients frequently ask us for our macro views, and in particular how we view the global economy and inflation. As part of our efforts to provide market color to our clients and
prospects, we are introducing our “Asset Allocation Series”. In this first piece, we discuss our inflation outlook for 2018.
During a recent interview, a top government official said “you can have wage inflation and not necessarily have inflation concerns in general.”1 We find this comment counterintuitive and potentially misleading. Perhaps this train of thought is a symptom of the Personal Consumption Expenditure (PCE) core measure in the U.S. running consistently below the Federal Reserve’s (Fed) 2% target for nearly two decades. This pervasive low inflation might reflect a relatively weak economic recovery and disinflationary mindset prevailing in the market.
