Levy Says Accelerating Pay Inflation Likely to be Big Surprise for Markets in Second Half

Escalating Trade War Could Cause Profits to Fall by Year-End

MOUNT KISCO, N.Y., June 28, 2018 (GLOBE NEWSWIRE) -- David Levy wrote to clients in the June 2018 issue of The Levy Forecast® that market expectations of modest inflation and interest-rate increases are “a fantasy because the only way worker compensation will not accelerate considerably in the year ahead and thereafter is if the expansion is either terminated or seriously impaired for a time.”

The chairman of the independent Jerome Levy Forecasting Center LLC (www.levyforecast.com) warned that pay rate inflation is likely to jolt investors, because “what many people do not fathom is that labor markets do not tighten in a consistent, linear fashion. . . the size of pay raises may well rise startlingly by year-end.

Levy wrote, in a publication devoted to forecasting and analyzing economic and business conditions since 1949, that rising interest rates would, “in this Big Balance Sheet World, severely undermine global financial conditions and turn down domestic asset markets” well before weakening the economy enough to slow inflation.

Levy also cautioned that escalating trade war developments would mean profits tending toward the low range of the Center’s estimates for the rest of the year, as the potential global financial market and economic disturbances could cause “profits [in seasonally adjusted NIPA terms] to flatten from the second quarter to the third and even slip from the third to the fourth.

About The Jerome Levy Forecasting Center
The Jerome Levy Forecasting Center LLC – the world leader in applying the macroeconomic Profits Perspective to economic analysis and forecasting – conducts cutting edge economic research and offers consulting services to its clients. The goal of the Levy Forecasting Center is to improve its clients’ business and investment performance by providing them with powerful insights into economic risks and opportunities – insights that are difficult or even impossible to achieve with conventional approaches to macroeconomic analysis. Additional information may be found at www.levyforecast.com.

The full Levy Forecast is available to the press in PDF format by contacting Robert King at The Jerome Levy Forecasting Center – rking@levyforecast.com or 914-666-0641.

The Jerome Levy Forecasting Center
69 South Moger Avenue, Suite 202
Mount Kisco, NY 10549
Robert C. King, 914-666-0641