in my Massachusetts General Hospital Article about inflationI wrote:
Looking ahead, the inflation surge may be over. Rising rent pressure is dissipating and supply chain issues have disappeared. Finally, as the Federal Reserve has continued to raise interest rates over the past year and a half, which has slowed economic growth, the labor market has cooled significantly, further easing the pressure on rising prices.
this means without any big surprises — Just like another major disruption in the oil market — inflation is likely to continue to slow, albeit perhaps more slowly than most would like. On the other hand, if the Fed has tightened too much – as the effects of past rate hikes continue to ripple through the economy – inflation could fall faster, albeit at the cost of a possible recession.
What’s the potential big surprise? Here is a graph:
figure 1: Map as of October 16, 2023. source: lip.
The Eisenhower Carrier Strike Group (CSG) heads to the Mediterranean; the Vinson CSG deploys to the “Indo-Pacific.” Bataan Amphibious Readiness Group (ARG) heads to the Eastern Mediterranean.
Here’s another one:
figure 2: Geopolitical Risk Daily Index (blue) and centered 7-day moving average (red). source: caldara-jacovielloand the author’s calculations.
Geopolitical risk indices have increased and are likely to continue. Tight oil supplies caused by the expansion of the war will certainly increase inflationary pressures.
