Michael Jamison, Portfolio Manager
July 31, 2018
A late-cycle increase in inflation is normal. Product and labor markets tend to tighten, and delays and shortages become more common as increasing activity strains the limits of the economy. It took longer than normal for the recent U.S. economy to reach these late-stage constraints because of the slow growth trajectory of the recovery and expansion. However, the business cycle has not been repealed, and inflation has been building as it always does during late-cycles.

Investors appear unaware of how high U.S. inflation already is relative to inflation rates around the world. Exhibit B shows that the U.S. currently has the highest inflation rate in the world among developed nations.