How long will higher inflation “stick” around?
A closer look at the April inflation report reveals why higher prices may last longer than once thought.
Markets and Economy
Nationwide’s Chief of Investment Research and the Nationwide Economics team offer daily and weekly commentary and analysis of the equity and bond markets, including an overview of economic data being released, global market news, commodities and market performance by index returns. These timely insights can help you navigate markets and understand emerging trends.
Can the Fed slow inflation without a recession?
Economic growth was negative in the first quarter, but there appears to be less cause for alarm than the headline number suggests, with consumer and business investment spending solid. Rising mortgage rates and prices have begun to hurt home sales, but excess demand remains, and job growth is still strong thanks to record-high labor demand. Although the possibility of inflation persisting at a high level poses a threat, above-trend growth is still expected for the remainder of the year.
Investors seek a bottom as sentiment collapses
The S&P 500 has lost nearly 16% more than one-third through the year, representing the third-worst beginning to a year on record. In the previous four worst starts (1932, 1970, 1939, and 2020), the index saw a strong return from this point through year-end, averaging nearly 20%. A decline of 20% has occurred 14 times in the history of the S&P 500, with just two (1987 and 1966) not coincident with a recession, per Bloomberg.
Overall CPI down, but core inflation is up
Growth in the overall consumer price index (CPI) slowed for April, mostly because of a (temporary?) decline in gasoline prices. But the core CPI, removing the volatile food and energy components and often viewed as a better measure of underlying inflation than the total, grew more rapidly for April. Meanwhile, April small businesses optimism remained subdued while consumer sentiment fell to the lowest level since 2011 for early May.
Nationwide Market Insights Podcast: Inflation continues. Is relief on the way?
The recent CPI report shows that inflation is still at record levels, but at a slightly lower level than the previous month's report. Nationwide's Deputy Chief Economist Bryan Jordan and Senior Economist Ben Ayers take a closer look at the CPI report. What sectors are being impacted the most? Where do we see some relief? How is this cycle different than previous inflations? And what's the outlook for the months ahead?
Cycle Watch | May 2022: Economic cross-currents
Last month, the Federal Reserve kicked off a series of interest rate hikes to get inflation under control. As interest rates rise, the economy is likely to slow down, though healthy GDP growth is still expected in 2022.
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