We cannot help but say it once again: it seems that the Fed is getting tangled in a mess of its own making.
While Jerome Powell has kept ignoring the elephant in the room, a new red-hot inflation data report showed numbers that should make the Fed feel uncomfortable:
- US inflation in April accelerated at its fastest pace in more than 12 years, with consumer prices leaping 4.2%.
- Such an increase was well above expectations as economists were initially forecasting a 3.6% annual rise.
So it seems like inflation has, in fact, returned and could get worse.
In a previous SPOTLIGHT article, we warned that the Fed was increasingly stuck between two bad choices: letting inflation spiral out of control or have a market crash that could significantly weaken the economy.
A number of top investors and companies have already publicly expressed their worries about inflation:
- Warren Buffett
- Mohamed El-Erian
- Janet Yellen
- Sam Zell
- Michael Burry
- Kraft Heinz
- Boston Beer Company
- Mattel Inc
- Whirlpool Corp
Oh, and 87% of Americans, too.
It’s still too early to predict the full impact of inflation on the economy and stock market, but we’ll keep our finger on the pulse.