“…there’s a “common factor” that has driven price increases higher. It’s the pandemic, and it’s everything about the pandemic: The closing of the economy, the reopening of the economy, the fiscal support, the monetary support. All the things that happened went into high inflation. And I think we’ve come to expect that — expect it to be more persistent.” - Jerome Powell, June 21, 2023, excerpt from his testimony to the House Financial Services Committee
2Q2023 OCIO Commentary
The strong performance of global equity markets in the first half of 2023 create a perception of strong economic prospects, but it is hard to dismiss the forces that collectively can only slow economic activity. Even as overall inflation (CPI-U) figures have continued to decline, the service sector inflation, of which wages is a bigger component, has remained high and wage growth, which tends to be “sticky”, has remained close to 6.7%.