text: Analyst Comment: Looking ahead, indicators continue to decrease optimism, and more data points have presented themselves. JP Morgan is a specific example, but banks have largely started to shift their tone towards an extended period of inflation and decreased economic activity, including the previously mentioned IMF, which has revised its growth forecast several times for this year already. To mitigate risk, people will likely begin to reduce exposure to investments in the United States that are failing to outpace inflation and shift those investments into commodities. – T.W.ECONOMIC WARNING INTSUMSupply driven inflationThe BlackRock Investment Institute claims that we have entered a time where “supply constraints are the driving force of inflation, rather than excess demand.” As a result, the institute claims that we will live with more inflation throughout the end of this time and will experience more “macro volatility.” According to the report, “economy-wide supply limits will begin to bind as energy costs rise. Big shifts across sectors will create supply bottlenecks. Both will add to inflation, as in the restart.” The institute also believes that “climate change will increase inflation.”Interestingly, the Chinese tenancy to supply cheap imports to the rest of the globe is beginning to slow down. This isn’t because of input shortcomings; instead, their population is beginning to age, contributing to a lack of labor. This is expected to contribute to inflation in the future, as countries will begin to look elsewhere to fulfill orders on time. The most considerable risk seen by the Institute for future economic health is central banks raising rates too high and damaging growth, realizing that they would rather have inflation. This would force central banks to “flatten or even invert” yield curves to stimulate growth, letting inflation run free. (AC: Historically, for at least the past 30 years, inflation has been controlled primarily by demand-side factors. Suppliers were typically able to obtain whatever resources were necessary to supply consumers with goods, albeit at a higher price amid markets with higher demand. Once the pandemic struck, suppliers could no longer produce at capacities demanded, creating the supply chain bottlenecks we are still working through today. Now, prices are increasing not because consumers want to purchase an excessive amount of goods [although demand is higher than pre-pandemic levels], but because suppliers simply can not produce them. Producers willing to pay the most for inputs are winning contracts, and consumers are willing to pay the price increase to obtain scarce goods. Ultimately, price pressures are passed on to consumers; however, the origination of these price increases has changed significantly over the past two years. – T.W.)Joint Economic Committee on Q4 GDP and year ahead