Thank you to Romaine Bostick, CFA and Katie Greifeld for a good conversation earlier this week. Despite recent encouraging data, we expect this last stretch of the race towards 2% inflation to be the toughest. Service inflation ran at 2.9% from 1997 to 2019. Inflation remained low during that period because goods inflation averaged .04% (effectively zero). For many reasons, this negligible goods inflation will be very difficult to achieve in the next decade. These reasons include climate change, fragmenting supply chains, and rising labor cost in parts of the world that used to export deflation. As a result, and as the bond market is finally reflecting, interest rates are likely to remain higher for longer.
On August 7, 2023, Emily Bowersock Hill, Founder and CEO of Bowersock Capital Partners, joined Romaine Bostick and Katie Greifeld on Bloomberg Markets: The Close, where she discussed the shifting views on the prospects for a soft landing. Emily’s interview begins at the 11:58 mark. https://lnkd.in/gfPdE8Yr