Nov 15, 2019

Maybe inflation isn't dead

Reproduced from Institute of International Finance; Chart: Axios Visuals

The main reason the debt has been such a non-issue is that inflation in the U.S. and most industrialized countries has stayed persistently low.

Why it matters: However, more fund managers and economists are increasingly saying they're worried that may not hold.

What they're saying: The main factors holding down inflation, at least in the U.S., are technology and income inequality, says David Kelly, chief global strategist at JPMorgan Asset Management. That's been helped by the U.S.-China trade war, which has damaged business sentiment and investment, holding down demand.

  • "You’ve got this increasingly unequal distribution of income that is preventing aggregate demand from getting too high."
  • "You can’t change the information technology, but if you do push up aggregate demand you could suddenly have a rush of inflation."

What to watch: Kelly also sees the unequal growth of assets in relation to the growth of the real economy as keeping inflation contained. But that could change.

  • "We’ve been avoiding that right now because the ownership of the assets is so tilted towards upper-income individuals who don’t spend them."
  • "But the day that those assets get spent, or people think they’re going to get spent, or you have MMT or big tax cuts for the poor, things are going to get sticky," Kelly says.

Go deeper:

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Capital markets are eyeing the world's soaring debt

Illustration: Aïda Amer/Axios

The world's debt is rising to unprecedented levels. While politicians and the general public have seemingly lost interest, capital markets are beginning to show signs of strain, financial experts say.

Driving the news: Global debt surged by $7.5 trillion in the first half of the year, hitting a new record of more than $250 trillion, according to data released Thursday from the Institute of International Finance.

Go deeperArrowNov 15, 2019

Federal Reserve keeps interest rates unchanged

Fed chair Jerome Powell at a news conference in October. Photo: Eric Baradat/AFP via Getty Images

The Federal Reserve said Wednesday that it would keep the benchmark interest rate at its current range of 1.5%-1.75%, a widely expected decision that ends the Fed's rate-cutting streak.

Why it matters: The central bank is confident the economy doesn't need easier borrowing conditions to stay afloat and signaled no further cuts through the 2020 presidential election, though uncertainties like the U.S.-China trade war remain. Wednesday's decision comes despite President Trump's continued push to goad the Fed to further trim rates.

Go deeperArrowDec 11, 2019

Consumers are picking up the lagging business sector's slack

Reproduced from LPL Research; Note: "Other components" includes housing, inventories, trade and government spending; Chart: Axios Visuals

The narrative of the U.S. economy lately has been strong consumer spending as the cornerstone of growth, offsetting lackluster business investment.

Driving the news: Economists pared down estimates for Q4 GDP — prompted by worse-than-expected economic data on Friday. The downgrades would have been worse, if not for retail sales figures that pointed to a solid, but slightly more cautious, consumer.

Go deeperArrowNov 18, 2019