The real GDP of a country is an inflation-adjusted estimate of its economic production over a year. GDP is primarily estimated using the expenditure technique, using the formula GDP = C + G + I + NX (where C stands for consumption, G for government spending, I for investment, and NX for net exports). What […]
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TIPS (Treasury Inflation-Protected Securities) give inflation protection. As assessed by the Consumer Price Index, the principal of a TIPS increases with inflation and falls with deflation. When a TIPS matures, the adjusted principal or the original principal, whichever is greater, is paid to you. TIPS pay a fixed rate of interest twice a year. Because
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Mark Perry reminds out that, despite China’s enormous GDP, its GDP per capita remains low due to the country’s large population (1.33 billion people). While Perry is true in his assessment, the difficulty is that he does not comprehend the implications of this fact. He claims that it still has a long way to go
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Inflationary pressures have been increasing, as have fears that consumers may cut back on spending as they weary of increased costs hitting their wallets with no relief in sight. According to Jeff Buchbinder, stock strategist at LPL Financial, “too much should not be read into one report.” “However, it emphasizes that the stakes in the
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The real GDP growth rate has reached a six-year low of 5%. (see Chart 1). The real GDP growth rate is obtained by subtracting the inflation rate from the nominal GDP growth rate, which is the growth rate calculated in current prices. What’s more concerning is the slowdown in nominal GDP growth, which was forecast
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We report the 10-year predicted inflation rate, which is the rate at which inflation is expected to average during the next ten years. Chart 1: Ten-Year Expected Inflation and Real and Inflation Risk Premia The inflation risk premium, real risk premium, and real interest rate are all estimated by the model in this graph. The
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When markets decline, many investors want to get out as soon as possible to avoid the anguish of losing money. The market is really improving future rewards for investors who buy in by discounting stocks at these times. Great companies are well positioned to grow in the next 10 to 20 years, so a drop
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The use of government spending and tax policies to impact economic circumstances is referred to as fiscal policy. Fiscal policy is largely founded on the views of John Maynard Keynes, who claimed that governments could regulate economic activity and stabilize the business cycle. During a recession, the government may use expansionary fiscal policy to boost
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Over the last ten years, employers have had it rather easy. Inflation has remained between 1% and 2%, while wage raises have risen between 2% and 3% during the same period. However, for the first time in decades, “inflation is a significant influence in determining annual rises,” according to Gad Levanon, the Conference Board’s top
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“While cash isn’t a growth asset, it will typically stay up with inflation in nominal terms if inflation is accompanied by rising short-term interest rates,” she continues. CFP and founder of Dare to Dream Financial Planning Anna N’Jie-Konte agrees. With the epidemic demonstrating how volatile the economy can be, N’Jie-Konte advises maintaining some money in
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