TSX:AX.PR.E - Post by User
Post by
Torontojayon Aug 26, 2024 9:08am
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Post# 36195829
The Fed is halfway there
The Fed is halfway there The Fed has slayed inflation for now but they still have to worry about the unemployment rate moving higher in the months ahead. What people fail to understand is that inflation is heading lower because people are losing their jobs or are having to work part time to stay afloat. We already see what's happening with McDonald's, Starbucks and Home Depot. Nominal sales are not keeping up with the inflation rate which puts downward pressure on prices. This eventually leads to layoffs so that companies can protect their margins. The momentum is already heading in that direction but the question remains. How high is the unemployment rate going to be in the months ahead? We all know that high unemployment leads to lower gdp which then leads to lower stock prices and the completion to the boom and bust cycle.
Happens every single time.