Want to know why we're going to have a transitory burst of inflation? Look no further than non-defense cap goods orders bursting out to new highs -- and business inventory/sales ratios at virtually tied with the record low set in the post-war boom year of 1950 (the year we've been using as our model for 2021, by the way).
What you're not hearing about the re-opening of America
Thursday, May 27, 2021
Key data isn't just back to prepandemic levels. It's way better.
Update to Strategic View
Restaurant utilization, which many had said would never recover, is rising to levels better than pre-pandemic in the US overall and in a majority of individual states. Capital goods orders -- the precursor of growth -- have broken out to new historic highs. The business inventory/sales ratio is near the tightest in history, almost tying the all-time low set in 1950 at the dawn of the post-war boom. While inflation was somewhat high in 1950, real GDP growth at 13.4% was by far the strongest in history. These indicators point to a similar experience in the wake of the global war against Covid-19.