Higher Oil Prices Mean Tighter Budgets, Higher Inflation, Hartford Says

Employment growth, however, appears to be on the “verge of an important reversal,” Hartford Investment professionals say, with the unemployment rate “moving in lock-step” with jobless claims. “We expect the employment data to begin confirming the strength we are seeing elsewhere in the economy and will likely provide support for a further pickup in demand,” the Hartford report states.  

Increasing employment along with “positive wealth created by rising equity values,” will support consumer spending in the near term. However, the report notes that households will continue to struggle with “excessive debt burdens” that will need to be tackled through a combination of higher savings and “deleveraging.”

Higher inflation is also on the horizon, the Hartford report states. “Over the last six months headline CPI inflation figures have been driven up by higher food and energy prices, while the core measure of CPI has climbed much more slowly,” the report states. “With rising tensions in the Middle East pushing oil prices higher, we expect to see headline CPI inflation approach the Federal Reserve’s 2% target by mid-year and on its way to 2.0%-2.50% by year-end.”