US inflation draws concerns from investors, experts
NEW YORK -- Inflation in the United States is reaching decade highs, and drawing concerns from investors and experts as well as ordinary consumers, who believe the country's inflationary pressures are underestimated and the Federal Reserve's inflation management framework should be questioned.
IMPACTS ON DECISION MAKING
High-flying inflation in the country in the last few quarters not only made many people delay big-ticket purchases but also drove investors into assets to hedge inflation risks.
"Now the higher inflation is beginning to create explosions and affect economic decision making. And so I think it's a problem right now," said Mickey D. Levy, chief economist for Americas and Asia with Berenberg Capital Markets LLC.
Levy said the Fed is missing the point on the impact of inflation and "the higher inflation is gonna start digging into disposable income. So we have to really start thinking about these real effects."
Consumers' complaints about rising prices on homes, vehicles, and household durables have reached an all-time record, said the University of Michigan in a recent report on consumers' survey.
The index of consumer sentiment dropped to 80.8 in July from 85.5 in June, according to preliminary results of the survey.
Meanwhile, 57 percent of respondents believe inflation would accelerate in the next 12 months, with 35 percent of respondents seeing flat inflation, according to the latest quarterly survey of 900 US investors each with at least $1 million of investable assets by Swiss banking giant UBS.
The share of US investors believing inflation would speed up in the next 12 months is higher than 39 percent in Latin America, 38 percent in Asia, 46 percent in Switzerland and 48 percent in other parts of Europe, according to the survey issued by UBS on Wednesday.
As many as 58 percent of US investors said they were personally impacted by inflation in the last six months, according to the survey by UBS.
With 88 percent of investors believing that increased inflation could impact their portfolio significantly or somewhat, US investors are inclined to buy stocks or adjust their portfolio in other ways, according to the survey.
"Investors looking for ways to build inflation protection into portfolios can consider stocks with pricing power, or commodities including oil, which typically fare relatively well in periods of higher inflation," said Mark Haefele, chief investment officer with UBS Global Wealth Management in a recent note.