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It’s All in Inflation’s Hands Now

We found an interesting article on Morningstar today to share.  In spite of positive news recently in the markets and signs of renewed consumer spending, inflation continues to take its toll on consumer’s and businesses.  Consumer spending is line with positive projections, but Reports show that while “Consumer income reports continue to show healthy top-line growth, but when adjusted for inflation, incomes grew at a weak 1.2% annualized rate during the month of March”.

Furthermore:

“The big news this week was Thursday’s GDP report. While the headline growth rate of 1.8% was in line with expectations (and below the fourth quarter’s 3.1%), there was a lot of positive news imbedded in the report.

The slowing was due largely due to shifts in government defense spending and weather-related construction spending. Meanwhile, consumer spending fell far less than expected, and growth in business spending on equipment and software actually accelerated in the first quarter.”

You can read the full article, by Robert Johnson, CFA, and detailed report analysis here.

Robert Johnson, CFA, is associate director of economic analysis with Morningstar.
 
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