The snake is out of the grass and in the open, wrapping around the household budgets of Americans. It is squeezing out more money for gas, food and furniture, among other things.
The hawk is circling, readying itself to swoop in and snatch the snake — or at least scare it back into the underbrush.
In the wild kingdom of the U.S. economy, the Federal Reserve has set its sights on inflation. There is no doubt the central bank has turned hawkish about fast-inflating price trends. The hawk gets another look at the snake in the week ahead.
On Thursday, the January Consumer Price Index will be released by the Department of Labor. This is the most-common measurement of inflation, though the Federal Reserve prefers a different gauge.
Inflation likely hit a new generational high last month. Oil prices alone were up more than $10 a barrel in the first month of the year. Fueled by fuel, eggs, homes and cars, prices were up 7% in December compared to a year earlier. That far outstrips the 4.7% increase in average hourly earnings experienced by American workers.
That difference squeezes spending as the dollars do not stretch as far. The shortfall sneaks into financial decisions, coiling up and striking at spending choices of consumers and companies, leaving the economy gasping for growth.
The Fed wants to sink its talons into inflation soon. The central bank is expected to begin raising its target short-term interest rate in mid-March with the goal of slowing inflation before it sheds its skin into something larger and becomes a more permanent feature of the economic landscape.
In the short-term, investor portfolios are captive to just how fast the hawk will dive and how big the snake grows.
