Conversations with Commerce Trust

Heading into the Labor Day weekend, Chief Economist Scott Colbert takes a moment to review economic activity in August and highlights why we're still optimistic, despite a possible bumpy road in the near term, on our overall economic momentum going forward. https://info.commercetrustcompany.com/five-minutes-with-colbert-92

Earlier this week the stock market was up almost 20% on a year-to-date basis.  It has been driven upwards primarily on the back of an expanding economy, explosion in corporate earnings, and even a very, very positive recent employment report.  Since then, however,  it's clear that some storm clouds are brewing and we could experience periodic braking and a temporary slowdown.  Market observers are pulling back their outlook for growth somewhat in the second half of the year.  As Commerce Chief Economist Scott Colbert, CFA, explained in a previous segment,  we are heading into the part of the recovery where we are transitioning from a reliance on government stimulus to a natural, self-sustaining economy.  Scott sees this as rough weather that we're going to have to get through on our way to our long-term, positive economic outlook, as he further explains in this edition of “Five Minutes With Scott Colbert.”

https://info.commercetrustcompany.com/five-minutes-with-colbert-820

In this week’s “Five Minutes With Scott Colbert” video, Scott gives a glimpse at how the voting members of the Federal Reserve Open Market Committee develop their policy positions on evolving economic activity and exercise their influence on monetary policy-setting matters.  By focusing on the analysis of individual members in the course of the eight meetings the Central Bank conducts each year, Fed watchers can see the changing trends and shifts in the thinking of the overall body.  Will the Fed begin “tapering” their purchases of Treasuries and start raising interest rates sooner than they might have intended as the effects of the pandemic diminish?  Colbert suggests you can answer this question by looking at the individual positions that Fed Bank Presidents like James Bullard in St. Louis, Eric Rosengren in Boston and Robert S. Kaplan in Dallas are starting to articulate.  Will the rest of the Fed adopt a speedier return to normalize interest rates?  

Scott takes the position that the inflation spike upon us right now is still transitory as the Federal Reserve believes, but it is going to take longer than anticipated to moderate, probably sometime next year.  So expect economic stories on this inflationary speed bump to be a regular occurrence in the media for quite a while.  We will likely not settle back into the comfortable 1% to 2% inflation rate range of the recent past, but rather establish a new norm of 2% to 3% in 2022.  

Today, in the latest edition of our video series, Chief Economist Scott Colbert covers why growth is the operative word in the U.S. economy at the moment – annualized GDP growth in the 8% range, something that hasn’t been seen in the United States since 1983.

Commerce Trust Company Chief Economist Scott Colbert covers last week’s unanticipated miss in target U.S. employment numbers and the potential for growing inflation and global markets.