As economic activity bounces back and the labor market continues to improve, RSM Chief Economist Joe Brusuelas says that the U.S. economy is “entering boomtown.”
“I think we're about to pivot from recovery to expansion in the economy,” Brusuelas said. “It's appropriate that members of the Federal Reserve begin to signal to markets that things are not going to be the same forever. It's appropriate [for the Fed] to begin to think about tapering the pace of asset purchases or, altering the composition of those asset purchases”.
And calls from investors for the Fed to revise its easy monetary policy are growing louder as well, after recent CPI data showed inflation is on the rise. U.S. inflation soared to a 13-year high in April, as the core personal consumption expenditures (PCE) price index, excluding food and energy, rose 3.1%.
Nearly 700,000 jobs were added and a decline in the unemployment rate to 5.6% in the U.S. June employment report. According to Brusuelas, the major economic narrative to emerge from the summer hiring reports will likely be that consumers are flush with cash and pivoting to demand services, which will bolster overall hiring during the summer months. Thus, the June employment report will likely reflect a surge in hiring to prepare for what will be a monumental release of pent-up demand for services over the next three months. “I don't think we're going to be running up against any significant inflationary pressures”.
Speaking to the AM&AA, Brusuelas says he expects 7.5% growth rate this year, 4.5% unemployment and a 4.0% inflation rate.
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