No. of Recommendations: 1
Disclosure:
As an early retiree -- I frankly love the 5% on cash. My goal was a nominal 6% on stocks.......so if I can get 5% but without the risk I can live with that. But if rates go down - then hopefully it means some of my equity values, or even rental home values go up. Point being - I don't have a big axe to grind either way.
I keep hearing up to today - the Fed is serious about 2%. I also keep hearing that "the market" feels this latest increase might be it.
I was wondering what Macro's think: Is 2% possible without a black swan? Reasons I continue to believe that 3% will be the new normal and 2 will be elusive....
*While hiring is not as hot as before - the labor market is still tight. There's a paralysis combined with penchant for political correctness - hence no immigration fix is possible either. A.I will take many jobs----but that isn't right around the corner.
*UPS just got a $7.50 an hour raise to be spread over 5 years. The Railers recently got a few bucks. The United Auto Workers - guaranteed will get decent raises. While in the periphery QSR restaurants and Big Box retailers are facing pockets of unionization, or threat of it. Point being - not a recipe for pay cuts. Oh, the airline pilots got a nice raise too and again - hasn't made it into the economy yet.
These are rather large employers but more importantly, those higher wages will either be absorbed by companies and shareholders, OR passed on to the consumer and I think the latter is how it usually goes. Transporting stuff. Cars. Travel. These expenses hit all industries in one way or the other.
Point being..... I don't see this as DISinflationary to say the least.
This is why I feel that rates will go up more than market is thinking, OR 2% inflation isn't in the cards barring black swans.
Any opinions?
