The Relationship between U.S. Inflation and Overseas Markets

Overall inflation in the US is currently running at about 1.5%, still less than the 2.0% target that the Federal Reserve shoots for. Fairly or not, many equate a decrease in inflation enough to cause deflation, with a recessionary environment or economy. While low inflation is not in and of itself bad, when it gets too low it provides less room to avoid a spiraling effect towards deflation in the event some sort of macroeconomic shock occurs. The problem becomes more complicated as the US economy becomes more dependent on the world economy. True, while slow and plodding, it is generally agreed that the US economy is on the mend. However, the specialized calculus as determined by different economists can sometimes result in confusing results when different estimates of the relevant factors are used in the equation. This is why the stock market has been behaving in a more volatile way recently, with large swings in valuation even within a 1 day period.

More directly, what situation would we be in if inflation dropped a mere 0.5%, due to multiple threats overseas such as a possible slide back into recession by Europe, coupled with a decreasingly inflationary environment in China, the so called “manufacturer to the world”.

It is also unclear, given the different strategies employed by the Fed by multiple attempts to stabilize the economy over the last 6 years, what the Fed can effectively do if called-upon to act once again. Our lives in some ways have never been more complicated, to the extent that the macroeconomic forces impact each of our microeconomic lives.

View Greg Liesen's profile on LinkedIn

34 thoughts on “The Relationship between U.S. Inflation and Overseas Markets”

  1. I truly appreciate this article post.Really thank you! Want more. Cocoros

  2. Simply wish to say your article is as surprising. The clarity in your post is just cool and i could assume you are an expert on this subject. Well with your permission let me to grab your feed to keep up to date with forthcoming post. Thanks a million and please carry on the gratifying work.

  3. Oh my goodness! an amazing article dude. Thank you However I am experiencing issue with ur rss . Don’t know why Unable to subscribe to it. Is there anyone getting identical rss problem? Anyone who knows kindly respond. Thnkx

  4. Usually I do not learn post on blogs, however I would like to say that this write-up very compelled me to check out and do it! Your writing style has been amazed me. Thanks, quite great post.
    buy viagra

  5. Hey there! I’ve been reading your website for some time now and finally got the courage to go ahead and give you a shout out from Lubbock Texas! Just wanted to tell you keep up the good work!

  6. I do consider all of the concepts you’ve introduced on your post. They’re very convincing and will certainly work. Nonetheless, the posts are too short for starters. Could you please lengthen them a bit from next time? Thanks for the post. Pristina Hotels

  7. I simply could not go away your website before suggesting that I actually enjoyed the standard information a person provide on your visitors? Is going to be again continuously in order to check out new posts

  8. Nice post. I learn something more challenging on different blogs everyday. It will always be stimulating to read content from other writers and practice a little something from their store. I’d prefer to use some with the content on my blog whether you don’t mind. Natually I’ll give you a link on your web blog. Thanks for sharing.

Comments are closed.