re: Inflation Watch -- Last Week of Feb-2013 Edition

I'm just looking for reasons to hope for inflation so we can get out of ZIRP and start the medicinal rate hike pain sooner rather than later.

Right now, inflation numbers remain quite low, and the European recession doesn't seem to be getting any better, and that combined with low government spending in the U.S. and attempts at intrusive regulatory implementation will likely result in inflation remaining very low for 2013.

However, it is possible to have high inflation in the midst of a stagnant economy and persistently high unemployment levels. The rise of home prices and U.S. equities hints that monetary policy might finally be running a little bit hot right now, and the core inflation figure of 0.3% for January gives a faint signal that inflation might finally start to pick up.

Right now, the odds are against a 3-4% inflation year, but I'm just keeping on the lookout for any signs that might appear on the distant horizon.


EDIT: And while revolving consumer credit has remained stagnant for the last 2.5 years (in my opinion due to new credit card regulations), overall consumer credit is steadily rising, with the $1.93 trillion figure for Dec-2012 being much higher than the pre-crash peak of $1.56 trillion in Jul-2008, or for that matter, the $1.51 trillion trough in Feb-2010: LINK. In general I think the credit card legislation and the steep rise in the minimum wage since 2007 have had much larger effects in dampening GDP growth than is commonly recognized.