I have some big problems with the main UMich consumer survey. The inflation expectations portion is separate but I wonder if the Fed should be relying on a private survey to be making huge policy decisions.
- Inflation is high and broad based
- I want positive forward looking real rates across the curve
- I’m also watching the demand side
- You have to be flexible
- Consumers are just determined to spend
- Our difficult task is there could be a couple of strong inflation readings interspersed with weak ones
- I ask myself if we have real rates where they need in order for them to have an impact on US economy
The final UMich survey is due on Friday. It would be funny if the final reading was back at 3% and the Fed panicked.
Another possibility is something like 2010, where expectations spiked for one-month end then went right back to 2.9-3.0%.
