Stimulus Talks Collapse, Is Inflation Back or Just Visiting?

The stimulus negotiations ended with no deal and partisan bickering, resulting in limited executive orders that may be challenged in court. With Congress going on recess, the next deadline is a big one! New annual appropriations bills need to be passed by October 1 to avoid a government shutdown. Congress will convene again in September with August economic data possibly providing more context on the urgency or lack thereof. The hyper partisan atmosphere of the election should also make it “interesting”. Meanwhile, today’s surprising jump in CPI indicated inflation is still around. The 0.6% core rate increase (excluding food and energy) was the highest since 1991. This is partially a result of pent up demand for items whose prices were depressed during the March – June pandemic shut down and gradual reopening. One month is not a trend, but the 10 year T jumped to 0.68% (note that it hit a low of 0.50% last Tuesday). That’s a 36% increase in a week. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners