Economists React: Concerns About Inflation Expectations

You can read the more detailed comments and analysis by following the link in the clip.

Seems more and more like 1978.

clipped from blogs.wsj.com Not surprisingly, the major driver of the sharp jump in the headline was a 5.7% spike in gasoline prices. Also, utility rates jumped 2.3%. Looking ahead, it appears that gasoline will show an even sharper advance in June – somewhere in the neighborhood of +9% based on current quotes –David Greenlaw, Morgan Stanley The primary question left outstanding, is when will those headline increases begin to visibly show up in the core. Right now, what has mitigated a much sharper rise in core prices, which by the way at 2.3% on an annualized basis is well above the implied target range at the Fed –Joseph Brusuelas, Merk Investments I doubt that the headlines covering these data in tomorrow’s local newspaper will convince the general public that they should be marking down their inflation expectations. –Stephen Stanley, RBS Greenwich Capital The main takeaway from this report is the troublingly high level of headline inflation. –Zavh Pandl, Lehman Brothers