Inflation Pressures Up, Not Down: Lakshman Achuthan on Bloomberg Surveillance

The U.S. Future Inflation Gauge has reached a 47-month high, signaling that inflationary pressures are shifting to the upside rather than cooling down as markets expect. Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, argues that the prevailing disinflation narrative is flawed because forward-looking indicators challenge the "priced for perfection" consensus. While growth is expected to moderate, the risk of stagflation remains a concern if inflation fails to revert to the mean. Notably, this cyclical upturn in inflation was identified as early as February, independent of recent volatility in oil prices or Middle East tensions. Although the labor market remains stable with no immediate signs of recessionary job losses, the disconnect between negative real earnings and high nominal GDP suggests a "survival swiping" consumer environment that could become increasingly unstable if the Federal Reserve is forced into a more aggressive rate-hike cycle.