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During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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U.S. Future Inflation Gauge at Seven-Month High


A gauge of U.S. inflation pressures continued to rise in July to a seven-month high, indicating that deflation is unlikely under current economic conditions, a research group said on Friday.

The Economic Cycle Research Institute's U.S. Future Inflation Gauge(USFIG), designed to anticipate cyclical swings in the rate of inflation, rose to 84.6 in July from a downwardly revised 81.7 in June, which the group originally reported at 81.9.

The index has now risen from a 51-year low in March to a seven month high, due to "somewhat pronounced, pervasive and persistent advances in the USFIG and its components," said Lakshman Achuthan, managing director at ECRI. "Thus, deflation is clearly becoming much less of a danger for the U.S. economy."

"The implication, if the FIG keeps rising, is that the Fed's exit strategy may come into play sooner rather than later," Achuthan said.

The July USFIG annualized growth rate, which smooths out monthly fluctuations, leaped higher to negative 8.6 percent from negative 18.9 percent in June, which was revised higher from negative 18.5 percent.