tl;dr
David Kelly, chief global strategist at JPMorgan Asset Management, warns that the U.S. is in the early stages of a new inflation wave despite recent low consumer price data. He cites delayed tariff effects that will soon raise inflation, projecting the CPI to exceed 3.5% by year-end. Kelly highlight...
A top executive at JPMorgan Chase, David Kelly, chief global strategist at JPMorgan Asset Management, warns that the United States is only in the early stages of a new wave of inflation despite recent tame consumer price data. Kelly highlights a delayed inflationary reaction to tariffs, which he expects will soon be passed on to consumers, driving inflation higher over the coming months.
Kelly projects that inflation, as measured by the Consumer Price Index (CPI), will steadily climb to exceed 3.5% by the end of the year. He further identifies an often-overlooked factor likely to intensify inflation in early next year: the influx of income tax refunds. These refunds, akin to an additional stimulus, are predicted to trigger an aggressive burst of consumer spending, fueling further inflationary pressures.
Kelly cautions that the economy is expected to slow in the second half of the year as goods-related inflation permeates the market. However, the surge in tax refunds will act like a stimulus check, prompting consumers to increase spending habits and potentially elevating inflation even more. He offers a colorful analogy, suggesting that just as giving a mouse a cookie leads to a desire for milk, giving Americans stimulus checks leads to more spending.
Recent data from the U.S. Bureau of Labor Statistics shows consumer prices rose moderately by 2.7% in July, slightly below market expectations, but Kelly’s insights suggest this may be a temporary lull before inflation picks up pace again.