The term “reflationary growth” describes an environment where economic growth is solid and inflation, while still above the Fed’s target, is stable and well-supported by the underlying fundamentals. It is also, by the firm’s assessment, the environment we are in today.
In the latest episode of The Wealth Enterprise Briefing, Managing Partner Michael Zeuner and Senior Investment Manager Sam Sudame examine what that means in practice, how the current period differs from the two distinct economic environments that preceded it, and what the data actually shows about whether reflationary growth conditions remain intact.
They talk through:
- How the economic period from 2010 to 2020 differed from the stimulus-driven surge that followed, and what distinguishes both from the current environment.
- Why the shape of the U.S. Treasury 2s/10s spread, currently at a positive 40 basis points, matters as a signal of where the economy stands.
- What federal tax receipts, PMIs and the breadth of the U.S. leading economic index are currently indicating.
- Why capital expenditure has become the primary engine of the expansion, and what it means that real CapEx to GDP is above 15%, the highest level in more than 60 years.
- How to square market skepticism around AI-related stocks with semiconductor earnings up 100% in the first half of this year.
- What the weight of data is saying today, and what WE is watching for that would signal a shift.
If you have questions about how WE Family Offices is thinking about the current economic environment and what these conditions could mean for how your portfolio is constructed, please be in touch.
Important Information:
The Wealth Enterprise Briefing contains our current opinions and commentary, which are subject to change without notice. The Briefing is distributed for informational and educational purposes only and does not consider the specific investment objective, financial situation or particular needs of any recipient. Information contained herein has been obtained from sources we believe to be reliable, but we do not guarantee its completeness or accuracy. The information in the Briefing is not a recommendation of any security, and should not be relied upon as investment, legal or tax advice. Please consult with your investment, legal and tax advisors regarding any implications of the information presented in this presentation.
