From the September 2009 issue of Investment Advisor • Subscribe!

Asset Allocation

Behind the Numbers, with Sam Stovall

Inflation should not be a major concern of the economy in the current environment, noted Sam Stovall, S&P's chief investment strategist, in an appearance on CNBC on August 13, due to high unemployment rates. "Since wages are the biggest component of inflation, I think [unemployment] is going to keep a pretty good damper on things," he said. "Also, capacity utilization is now at 68%, close to the record low, so it's going to be a while before inflation becomes a major issue." Commenting on the actions likely from the Federal Reserve, he said, "I don't think the Fed is going to do anything...What they want to do is...make sure that the unemployment rate does not peak above 10%--which we think it will, and it will stay above 10% for all of 2010--and they don't want to make the mistake like Japan and pull away the stimulus too quickly."

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