BlackRock: It’s Way Too Early To Worry About Inflation

russ koesterich
Russ Koesterich

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There’s no shortage of people who are freaking out about inflation, thanks to the Fed’s ultra-easy monetary policy.However, convincing evidence of inflation has yet to appear in the economic data.

Russ Koesterich, Chief Investment Strategist at BlackRock, has a new post on the iShares blog titled When to Worry About Inflation.

He says concerns of inflation are premature for at least two reasons (verbatim):

  1. There is no wage inflation. Overall wage growth in the United States remains sluggish. The reason: The labour market is healing at an agonizingly slow pace. U-6, a broad measure of unemployment that also includes part-time workers looking for full-time work, is still indicating that about one in six American workers are unemployed or underemployed. Until this changes, raises will be hard to come by, and without wage inflation, overall inflation is likely to remain muted.
  2. Bank lending is only starting to pick up. While the Fed has been busy in recent years with the modern equivalent of a printing press, the newly created money has been mostly sitting on bank balance sheets.  Without much bank lending, growth in the money supply has been modest, lowering the risk of inflation. Though bank lending is starting to rise again, at least to businesses, it will take time before credit creation leads to any meaningful pickup in inflation.

Koesterich, however, says that inflation is something we may have to worry about in 2014 and beyond.  Read more at