When journalists or watchdog groups scrutinize donations to US politicians, they tend to focus on corporations and special-interest groups. In part this is because contributions from individuals are difficult to track. But it also stems from a widespread perception that contributions from individuals are less problematic.

“In many people’s minds, donations from companies tend to be corrupt, or have the potential to corrupt, while donations from individuals are seen as mostly ideologically driven,” said Edoardo Teso, an assistant professor of managerial economics and decision sciences at the Kellogg School.

But does that common distinction reflect reality? After all, many individuals are linked to companies, and if they’re senior enough in their organization’s hierarchies, they may stand to benefit a good deal from a particular candidate’s victory.

It’s an important question to ask, because donations from individuals make up the majority of campaign contributions — by a long shot. In 2018, more than three-fourths of the money raised by candidates for Congress came from individuals, up from 70% in 2000.

Teso set out to examine how much individual political donations were made in ways meant to strategically help the donor’s company. He did so by determining the share of corporate executives or members of corporate boards who are individual donors, and then sought to isolate the motivations of that subset of donors. Specifically, he wanted to understand whether this group’s financial contributions to members of Congress were driven purely by political ideology, or whether corporate leaders were at times donating with their companies’ interests in mind.

Teso focused on how donations from corporate leaders changed as congresspeople’s power waxed and waned. He found that the likelihood of an individual corporate leader donating to a member of Congress increased by 11% when that legislator received a committee assignment making him or her

By Sonal Desai, Ph.D., Chief Investment Officer, Franklin Templeton Fixed Income

While the US economy has been staging a strong recovery from the COVID-19 pandemic, the challenge is far from over, says Franklin Templeton Fixed Income CIO Sonal Desai. She says the tug of war between the virus and the economy seems likely to continue until an effective vaccine is made available at scale.

The first stage of the US economic recovery has proved as strong as we expected – and more. Both the rebound in spending and the decline in unemployment have exceeded most analysts’ expectations. This owes, in part, to the timely and decisive fiscal support: while the economy was largely shut down, stimulus checks and enhanced unemployment benefits boosted personal savings to a record high. As some states and local governments began to reopen their economies in May, this stored-up financial firepower allowed households to unleash the substantial pent-up demand for goods and services accumulated during the weeks and months of lockdown.

The health of the recovery was soon tested by a second wave of contagion in July, when COVID-19 cases rose anew. The recovery showed an encouraging degree of resilience. The improvement in economic activity and employment slowed, but did not kick into reverse. The second pulse of our Franklin Templeton-Gallup Economics of Recovery study, conducted in early August, showed that Americans’ willingness to engage in different economic activities, from shopping to travelling to going back to their places of work, was not set back by the resurgence of contagion.1 Our study also highlights that a majority of Americans intend to keep increasing their savings over the coming months but not pay down debt: they remain prudent in the face of the health and economic uncertainty, but are again accumulating spending power to deploy once


One of the most important variables that investors have been carefully watching and trying to predict in the past few months is inflation. The massive rise money supply to avoid economies from plunging into a deflationary depression has led market participants perplex about the potential consequences in the medium to long term. We have seen that uncertainty over inflation expectations have already started to surge significantly since March as more and more investors are convinced that inflation will eventually surprise the market and start to rise unexpectedly.

Inflation is an important variable for asset allocation as some risk off assets may start to perform very poorly if we see a surge in prices. Figure 1 shows three different measures of US inflation in the past 25 years: CPI, core CPI and core PCE (CPI is more volatile as it includes more volatile items such as food or energy). Even though there were short periods when inflation overshot the Fed’s 2-percent target, it has been more or less oscillating around 2% during the whole time period and modern portfolios never experience a sudden rise in consumer prices since 1995.

Figure 1

Source: Eikon Reuters

In this article, we will review the dynamics of the most popular leading indicators of inflation to see if inflationary pressures have started to rise.

Short term looks more deflationary

The first popular inflation leading indicator is the Underlying Inflation Gauge (UIG, full dataset), which is reported by the NY Fed. Figure 2 (left frame) shows that the UIG has historically led core CPI by 15 months and has been constantly plunging in the past two years; UIG is therefore not pricing any inflationary pressure at this stage.

The second indicator we also like to follow is the NFIB small business surveys, which is an indicator