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Weak inflation in the U.S. seems to be in the rearview mirror. One sign that may point toward stable to higher inflation moving forward is the resource utilization rate. History shows that an upturn in the utilization rate has often pointed toward higher inflation.

Think of this rate as a mirror image of slack in the economy. The higher the rate, the less slack in the economy and the greater the potential inflationary pressure. The utilization rate blends measures of manufacturing activity and employment — so this kind of relationship seems intuitive. In other words, sustained demand for capital and labor in the present could support higher prices for goods and services in the future. It’s one more reason that investors may want to consider buying inflation protection.

Past results are not predictive of results in future periods.