Welcome to Forstrong’s inaugural “Five Minute Macro” video series! During each episode our team will discuss the most important macro trends moving markets.

This edition focuses on the emergence of “high pressure” economics, a term that has moved swiftly back into today’s lexicon (and was originally popularized in the late 1960s by Arthur Okun). The concept is simple: most governments are now aiming to push GDP growth above its potential and unemployment below the natural rate. What should follow is that companies raise wages to attract and retain workers. To offset increased labor costs, firms would need to focus on boosting productivity. All of this should shrink income gaps, upgrade the labor force and increase innovation.

That’s the theory anyway. Over the long term, it really doesn’t matter if it works (isn’t economic theory fun?). What matters is that deficits and growth will be higher over the medium term.

Of course, risks are also rising. Asset prices are soaring. And, importantly, inflation expectations have now broken out of a long-term channel. How should investors respond?

Listen to John Teskey, VP of National Accounts and Tyler Mordy, CEO and CIO, discuss the above: