“…there’s a “common factor” that has driven price increases higher. It’s the pandemic, and it’s everything about the pandemic: The closing of the economy, the reopening of the economy, the fiscal support, the monetary support. All the things that happened went into high inflation. And I think we’ve come to expect that — expect it to be more persistent.” - Jerome Powell, June 21, 2023, excerpt from his testimony to the House Financial Services Committee

The strong performance of global equity markets in the first half of 2023 create a perception of strong economic prospects, but it is hard to dismiss the forces that collectively can only slow economic activity. Even as overall inflation (CPI-U) figures have continued to decline, the service sector inflation, of which wages is a bigger component, has remained high and wage growth, which tends to be “sticky”, has remained close to 6.7%.

Access the Canterbury Outsourced CIO: Second Quarter 2023 Commentary