The consumer price index (CPI) shows moderate inflation but housing starts confirms stagnation in the economy – Fed will cut interest rate sooner than later
Sam Adelton
Jul. 18, 2007

A new set of economic transformation is in the cards. The The inflation part of the stagflation is slowing – perhaps changing into disinflation or deflation. The housing starts number confirms that stagnation components are much more severe than the inflation components.

The Fed rate watchers are confused. They understand that Fed wants to keep the economy in the expansion stage with low inflation. They also understand that the economy is affected by stagflation. The inflation side of the stagflation phenomenon makes Fed tend towards rosining the rates. The stagnation part makes fed nervous in even staying put. The last thing they want is that the economy heads towards a recession.

Based on today’s data, it is clear that stagnation is outweighing the inflation. The Fed will cut interest rates sooner than later.

The consumer price index (CPI) shows moderate inflation but housing starts confirms stagnation in the economy – Fed will cut interest rate sooner than later
Sam Adelton
The inflation part of the stagflation is slowing – perhaps changing into disinflation or deflation. The housing starts number confirms that stagnation components are much more severe than the inflation components.
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