A summary of UBS analysis of US inflation
- its lower than you think,
- and its not sticky
and the markets' outsized reaction
- its reflects Fed failings
UBS argue that the reality of inflation in the US is that middle-income homeowning US households face a lower inflation rate than the headline implies, and therefore have better spending power than the reported CPI rate, and further, that there are significant regional variations that further lower the inflation experience for many consumers:
- That all supports a soft landing scenario
- Recent durable goods price deflation and pressure on profit-led inflation suggest no inflation stickiness
UBS add that the surge higher for 'risk' is a reflection of failings by the Federal Reserve:
- 3 rate cuts in 2024 seem most likely
- abrupt reactions to single data points to excessive reliance on “data dependence”
