With that in mind, as the Covid-torn economy reopens this month, I suspect it will be the trigger for a severe supply shock, and inflation — where a disrupted supply chain will prove to be out of synch with a resurgence of demand, driving prices higher. 

Add to this, as we get the jobs numbers tomorrow, the media will focus on the big and ugly payroll and unemployment rate.  But keep an eye on wage inflation.  Those that have been working (many essential workers) have been receiving pay increases. 

So, in the wake of historic joblessness, wages are ticking higher, not lower. The consensus view is for a 16% unemployment rate, 22 million jobs lost, and wage growth of 3.3%.  That wage growth figure has only been exceeded three times in the past decade (and that was last year).  And we may very well see the highest wage growth since before the Global Financial Crisis.  The high estimate of those surveyed in the Reuters poll on wage growth was +7.9%.

Now, some of these wage increases have been sold as temporary, but remember, the unemployment package including the Federal supplement gives a two member unemployed household, the annual equivalent of better than $80,000 a year.  That's 1.3 times the median household income.  With that, these wage increases will have to stick, to compete with the government. 

Add to this, if we do indeed feel the pain from supply shortages, the resulting rise in prices will put even more upward pressure on wages and wage demands.