Inflation Is Heading for 2%, JPMorgan's Kelly Says

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moomoo News Nov 14, 2023 13:26

JPMorgan Asset Management’s David Kelly says the economy is headed to the Federal Reserve’s target inflation level of 2%. He says there is "disinflation in the US economy." He speaks on "Bloomberg Surveillance."

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Transcript

  • 00:00 Start over again, please, David, We want to get that insight.
  • 00:04 Yeah.
  • 00:04 So this, this report is actually very close to what we're what we're looking for here
  • 00:08 as we're tracing out inflation.
  • 00:10 We can see it coming right down to to below 2% on the consumption debater by the fourth quarter of next year.
  • 00:16 And I think what's really important about this report is there are there's a large camp of people who say that the last mile is sticky, getting from three to two is sticky and we don't see that at all.
  • 00:25 We're going
  • 00:26 to step down inflation all the way through the fourth quarter of next year.
  • 00:29 And what I think this report is showing is across the board, there's disinflation in the US economy and we're heading back to 2%.
  • 00:35 So I think that's that is gradually changing the minds of the markets.
  • 00:39 I think that's why you've seen this move here, although it's not necessarily coming with pain, David.
  • 00:42 And this goes to the soft landing Nirvana that Neil Dutta was talking about that real average hourly earnings increased by 0.8%, up from 0.5%.
  • 00:51 People's earnings are exceeding at the pace of inflation at a material away
  • 00:56 for the first time in a long time.
  • 00:57 How much does that lead to a stickiness because people have the means to keep paying the prices?
  • 01:05 I don't think so because I mean we've had
  • 01:07 periods of
  • 01:08 of positive real wage growth before.
  • 01:10 But what I'm seeing looking at the earnings reports from from the last quarter is companies are very focused on holding earnings in check.
  • 01:17 Now yes, you can say that today's earnings are higher than inflation, but from a worker's perspective, they're not even getting catch up
  • 01:24 from all the inflation they saw
  • 01:25 over the last two years.
  • 01:27 So what you're seeing is partial compensation for previous inflation.
  • 01:31 But I don't see a lot of evidence that companies are are being able to push
  • 01:35 higher prices,
  • 01:36 the workers being able to push higher wages.
  • 01:39 So overall I think what we're seeing, we're not seeing a price wage spiral,
  • 01:42 we're seeing a price wage slinky.
  • 01:43 They're both gradually coming down the stairs slowly.
  • 01:46 I think this is just going to continue all the way to 2%.