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Inflation rates and bonds: a good sign for the economy?



Q: Does rising inflation and a stronger market for inflation-protected bonds signal good things for the economy this year?

Phil Blair, Manpower

Will not participate this week

Kelly Cunningham, San Diego Economic Research Institute

NO: The rise in inflation does not announce good things, but it is the inevitable result of misuse and manipulation of the currency. Inflation can easily escalate out of control and be difficult to reverse once unleashed. Currency, commodities and bond markets are, at this time, instantaneous inflation. The increase in oil to the highest level in two years is just one example that has an impact on the economy. Much of the debt is vulnerable to rising interest rates and endangers the underlying structural problems of the economy.

David Ely, San Diego State University

YES: The increase in inflation reflects stronger growth in the US. UU And other industrialized economies. The Federal Reserve, among others, has recently revised its growth forecasts for 2017 and 2018. After many years of undervaluation, it now seems more likely that the Federal Reserve will reach its inflation target of 2 percent. It is expected that inflation in the foreseeable future will be modest, so that the economy is not likely to suffer any of the negative consequences of excessive inflation.

Gina Champion-Cain, American National Investments

will not participate this week. [19659004] Alan Gin, University of San Diego

Will not participate this week.

James Hamilton, UC San Diego

YES: Weak investment demand has been a key factor that has kept interest rates low. Finally we are beginning to see signs of life again in Europe, causing interest rates around the world to rise again. That will help US exports. UU Generally, higher interest rates mean lower share prices. But when the cause of the higher interest rates is stronger economic growth, as I believe is the case at this time, we can see that the stock prices rise along with the interest rate.

Gary London, London Group of Realty Advisors

NO: Although there has been partial interest in TIPS (values ​​protected by Treasury inflation), which is a protection against inflation, and it is expected that the Inflation will generate more strength this year, the biggest story is the massive sale of global bonds. Last year there was a rebound for global economies. Expect more money to come out of US Treasury bonds. UU And in other global stocks or foreign bonds, now that other economies are strengthening. More investment options for global investors pursuing performance invites them to release funds and do exactly that by 2018.

Norma Miller, University of San Diego

NO: Inflation, by itself, above of modest levels, it is not good for the economy or the bond market, hence the interest in the TIP. The recent weakening of the dollar and higher oil prices suggest that there is likely to be more inflation. At the same time, our exports will be cheaper and more demanded, if we do not implode the previous trade agreements, which helps manufacturing jobs, which is positive.

Jamie Moraga, IntelliSolutions

NO: Inflation tends to increase when unemployment is low However, it also leads to an increase in interest rates and to the interest of investors in the bonds. This could moderate the earnings of the shares if investors resort to bonds to obtain higher yields and consumers see higher interest rates for mortgage loans and credit cards. The rise in interest rates often encourages consumers to save versus spend, which could slow the economy down.

Austin Neudecker, Rev.

YES: Strictly defined, the "economy" is expected to prosper from large reductions in corporate taxes, deregulation, moves toward privatization (eg, health, education ) and commercial agreements renegotiated for the next quarters. Shares and profits will rise, liquidity will increase and more investments will be made. but we must all ask ourselves "who really benefits and at what cost?" I am worried about the long-term implications and the unequal impact that inflation has on an increasingly bifurcated society.

Bob Rauch, R.A. Rauch & Associates

will not participate this week.

Lynn Reaser, Point Loma Nazarene University

YES: A reaffirmation of inflation reflects the improvement in demand by US consumers and businesses, as well as by customers abroad Until relatively recently, Federal Reserve officials and others had worried about the risk of deflation or falling prices, which plagued Japan for several years. A movement of inflation to around 2 percent would meet the objective of the Federal Reserve. However, inflation that accelerates above that level could trigger a new set of risks.

John Sarkisian, SKLZ

YES: I would expect the economy to remain strong this year. However, if the inflation rate increases and the Federal Reserve can find a way to raise rates, we could establish the factors that will lead to a future slowdown in economic growth in the coming years. Changes in federal taxes should boost the potential for an economic slowdown this year.

Chris Van Gorder, Scripps Health

YES: The rise in TIPS prices suggests that investors are convinced that the recent economic growth is sustainable and inflation will continue to rise. The approval of the federal tax bill will only serve to increase consumer and investor confidence. That, in turn, will be a catalyst to increase spending. My concern is that too rapid a rise in inflation could have a long-term negative impact on the economy.

Do you have an idea for a EconoMeter question? E-mail me at roger.showley@sduniontribune.com

roger.showley@sduniontribune.com; (619) 293-1286; Twitter: @rogershowley


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