Is inflation a problem?

The week of February 28, 2005 will feature some key reports on the economy and give investors a glimpse into the most recent trends that will be happening in the economy and ideally assuage the fears about inflation that made for a volatile February on Wall Street. According to the article, A good read on the economy could help stocks hold on to Gains, it states that strengths in the manufacturing and service sectors could mean consumers and businesses alike are willing to spend more. That, along with stronger job growth, will make the Federal Reserve’s policy of raising interest rates easier for corporate America to manage.

These reports will help determine whether the stock market can once again surpass December’s highs and hold on to the gains, or whether inflation fears will continue to keep stocks from making meaningful gains in the short term. So what do you think? Will the economy keep growing or will inflation become a problem?

1 comment:

Dr. Tufte said...

The media overblows the effects of news like this on the stock market.

If stock markets are efficient (which is the basic assumption in finance, and which appears to be broadly confirmed in the data) then news like this is already incorporated into stock prices.