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The latest Consumer Expectations survey (that is for May) from the New York Federal Reserve shows U.S. households’ anticipate inflation will rise at a 6.6% annual rate over the next year. That’s up from April expectations for a 6.3% rate. The May anticipated rate matches March results in the survey for the highest inflation anticipation on record. (Although I would note that this data series only goes back to June 2013.)

Longer-term inflation expectations were more subdued in May with consumers looking for inflation to average 3.9% over the next three years. That’s unchanged from April.

The problem in this survey number is that everything we know about inflation says that its much harder to bring it under control once expectations for higher inflation get embedded in consumer (and corporate) thinking. People make decisions and behave as if prices are going higher, which just about guarantees that prices will head higher.

So the worry in these numbers is that if expectations for higher inflation have become embedded in consumer thinking, the Federal Reserve will have to raise interest rates to higher levels than anticipated in order to bring it under control.

Good-bye soft landing. Hello recession.

As of the close in New York on Monday, June 13, the Standard & Poor’s 500 was down 3.88% and the Dow Jones Industrial Average was off 2.79%. The NASDAQ Composite was lower by 4.68% as tech stocks again took series damage. The small cap Russell 2000, which tends to be the most sensitive of the major indexes to sentiment on the economy, was off 4.76%.