The bell finally may be about to ring in the U.S. economy’s long-awaited bout with inflation.
With growth indicators improving and the Federal Reserve about to ease back on its monthly stimulus program, market talk is intensifying that inflation will arrive in earnest in 2014.
In fact, even if actual inflation does not escalate, the fear of it could be enough to provide a pretty substantial shock to the system.
That’s a scenario envisioned by Jim Paulsen, chief market strategist at Wells Capital Management, who sees “stronger economic growth,” declining unemployment and rising factory utilization leading to “a modest rise in the U.S. inflation rate” that will produce “the first ‘inflation scare/overheat/can the Fed exit fast enough’ panic of the recovery.”
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