On the verge of inflation…?

By ,   May 22, 2014

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Ever since the Fed embarked upon QE measures, people have feared rampant inflation.  However, it looks like Ben knew what he was doing, as the economy has successfully been on the mend for several years now, stimulus has been unprecedented, and inflation has remained low.  

However, it could be that we are finally on the verge of some inflationary pressure.  Capacity utilization rates are back up to 30 year averages.  Wage growth is still stagnant, but participation rates have been declining since 2000, and accelerating dramatically after 2010.  We are only 3 years into the roughly 18 year period Boomer retirement, so the labor force is shrinking fast and I think we will start to see wages going up soon.  There is a “skill gap” that the Millennials just can’t fill.  Also, bank lending has accelerated since the beginning from of 2014 from a declining pace seen since the middle of 2012, so that could also lead to an uptick in inflation.