U.S.: Good Bye, Endless Summer. Hello, Higher Rates?

Strong demand may force the Fed to take out more inflation insurance

It's crunch time in paradise. Wall Street's unusual volatility of late highlights a growing perception that the heavenly combination of strong growth, high profits, low unemployment, tame inflation, and a sidelined Federal Reserve has about run its course. The snake in this economic Eden is overly strong demand that is refocusing attention on the threat of higher inflation in 1998--and the Fed's possible preemptive response to it in coming months.

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