“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the US economy will likely boom. This boom could easily run into 2023, because all the spending could extend well into 2023.” – Jamie Dimon, CEO, JPMorgan, May 2021.

These comments chime with this month’s chart showing the percentage of businesses raising prices in the US is at a 35-year high.

We have been positioned for a vaccine-led rally and recovery since summer last year. That recovery is here, economies are opening up and animal spirits are being unleashed. But the pickup is so fast, messy and distorted that traditional measures are not giving the full picture. A year ago, businesses were planning for Armageddon and today some have never had it so good. On the ground, experience is instructive: what we observe and hear from companies. Although it may horrify the economists and scientists, sometimes the plural of anecdote is ‘data’ – spot the trend below. 

Inflation is a psychological phenomenon: the expectation of rising prices leads to rising prices

My barber is 50% more expensive, a pint of beer cost me £7.80 (I would have paid double!). I know a builder who is stockpiling materials worried he can’t get the right kit. Inflation is a psychological phenomenon: the expectation of rising prices leads to rising prices.