![]() ![]() The case depends on a few factors, some of which are familiar. “I do think inflation has peaked and has begun to rollover,” said Tim Holland, chief investment office at Orion Advisor Solutions. (Two experts didn’t offer a concrete prediction, though they proffered positive comments.) These analysts believe inflation will come close to the Fed’s target in around a year. “The Fed is likely going to become more comfortable with a number above 2%.” The Cautious Inflation OptimistsĪmong the other respondents to our unofficial survey, eight offered a relatively optimistic outlook. “The risk of the average inflation rate over the next several years being 3% or higher is underappreciated,” said Mace McCain, chief investment officer at Frost Investment Advisors. Rather than risk further economic meltdown, the Fed may simply learn to tolerate inflation above its 2% target for a while longer than many expect now. ![]() This so-called soft landing will be tough to pull off. The hope is that the Fed will be able to keep up a tighter monetary policy regime without causing unemployment to spike or a recession to occur. ![]() That also means Americans should expect the Fed to remain committed to its hawkish policy of raising interest rates and lowering its balance sheet. “Think in terms of years, not months,” said Brendan Murphy, head of global fixed income, North America at Insight Investment. ![]() These experts cautioned average Americans to dig in for the long haul. We’ll be lucky to get there by the end of 2023.” Could Inflation Stick Around for a While? “But I think the forecasts of inflation down to 3% a year from now are much too optimistic. “Inflation forecasting has been so bad given the variability of all the sources of higher prices, it’s impossible to say,” says Robert Frick, an economist at Navy Federal Credit Union. “Today, consumers are faced with increasing costs across the board while inflation remains at levels we haven’t seen since the early ‘80s,” says Gilliland.Īmong the experts we polled, 11 expressed similar sentiments to Gilliland’s: Inflation will remain well above the Fed’s 2% target for the next 12 months, if not longer. Recall that in the lead-up to the Covid-19 Recession, interest rates were close to zero, inflation was hovering around 2% and global supply chains were running smoothly. “Not for several years, if ever,” Gilliland says. The Inflation PessimistsĪsked when consumers might see pre-pandemic inflation trends again, Robert Gilliland of Concenture Wealth Management offered perhaps the bleakest response. While some expressed a bit of optimism that inflation could get closer to the Fed’s target level in about a year-a 2% annualized gain, as measured by the core personal consumption expenditures index ( PCE)-the majority echoed Levin’s perspective that consumers will have to deal with the status quo for a long time to come. “My guess is that it’s going to be a number of years away,” said Andrew Levin, an economics professor at Dartmouth College.”It’s an open question whether it’s possible to get there gradually or painfully with a recession.”įorbes Advisor interviewed 19 analysts, academics and money management professionals to get a sense of when they believed inflation would get back to normal. If you want to learn when the post-Covid 19 lockdown inflation hangover will end, don’t look to economists for comfort. When will the price of chicken thighs stop going up by double digits? When will gasoline get back below $3 a gallon? When will life feel like it did in January 2020? One question dominates the mind of the average American consumer: When will all the weirdness in the economy end? ![]()
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