Inflation Signals from Commodities and Growing Household Wealth

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Inflation Signals and Household Wealth

By Blu Putnam, Chief Economist
Erik Norland, Senior Economist
CME Group

What Are Commodities Signaling About Inflation?

  • ​​Prices for commodities like lumber, corn and soybeans are surging.
  • The gains have lifted inflation expectations to their highest level since 2013.
  • But these markets are in backwardation, where future prices are relatively lower.
  • Are these commodities signaling that higher inflation might peter out over time?
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U.S. Household Wealth Grows During Pandemic

  • ​​​​​Household wealth rose by 10% during pandemic, fell 20% during Great Recession.
  • U.S. savings rose to 20% of income during pandemic vs. 7.5% during 2008 meltdown.
  • Will high savings lead to a surge in consumer spending once pandemic is over?
  • A wave of consumer spending might not be positive for equities, bonds.
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