The post-lockdown spending frenzy may contribute to a sharp rise in inflation, but Ed Yardeni believes the economy can handle it.
Yardeni, who spent decades on Wall Street running investment strategy for major firms including Prudential and Deutsche Bank, sees inflationary pressures as a temporary byproduct tied to massive reopenings and historic liquidity.
“People are just going to keep spending,” the Yardeni Research president told CNBC’s “Trading Nation” on Friday. “A lot of pent-up demand is getting satisfied here both in goods and services.”
Wall Street got further confirmation last week of strong inflation growth through the core personal consumption expenditures, a key gauge closely followed by the Federal Reserve. It rose a faster-than-expected 3.1% in April from a year earlier.
“When the lockdown restrictions were gradually lifted, we did see this tremendous surge in shopping, and shopping does release dopamine in the brain,” said Yardeni. “A lot of people just ran out and started doing shopping.”