The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to tick higher in tomorrow’s Thursday’s June report, based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection for -0.17 reflects a moderate improvement over the previous month. The forecast for June continues to anticipate that US economic growth is running below the historical trend rate for expansion. But the projection also points to a 3-month CFNAI reading that’s well above the level that marks a new NBER-defined recession.
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In some quarters, forecasts of sharply higher inflation in the US have become a perennial warning since the Great Recession ended in mid-2009. The Federal Reserve’s extraordinary efforts with monetary stimulus, the reasoning goes, is destined to unleash runaway inflation any day now. Those expectations have yet to align with the hard numbers. But in the wake of last month’s surprisingly strong payrolls report, the inflation hawks have a fresh set of talking points to discuss. Is it really different this time? For some insight, let’s review the historical relationship between inflation and wage growth.
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