The authors examine how the U.S. economy is moving closer to equilibrium while financial markets remain more imbalanced. Inflation and spending have moderated, but tighter policy may still need time to work. Equity valuations stand out, resembling conditions last seen around 2000.
Inching Toward Equilibrium
Bridgewater
Greg Jensen, Bob Prince
Article
1 Pages
Key Takeaways
Equilibrium Takes Time: The adjustment process had already lasted 4 years and could require another couple of years as earlier monetary tightening continues flowing through the economy.
Spending Still Elevated: Nominal spending growth had fallen from roughly 10% a year earlier, but remained above levels consistent with sustainable productivity and population growth.
Equity Pricing Stretched: Equity risk premiums had compressed toward levels last seen in 2000, a period subsequently followed by a decade of poor equity returns.
Join our newsletter to have all of this content + Exclusive Newsletter Bonus Content delivered to your inbox every week
