Archive

September 16, 2021
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Inflation expectations start stretching

  • New price shocks stretch the peak and persistence of excess inflation. Although we still see this pressure as transitory, we are mindful of the risk expectations might shift. The responsiveness of inflation forwards to spot changes is most concerning.
  • Wage negotiations will be the ultimate check, albeit lagging behind expectations and our statistical measures of underlying inflation. Wages corroborate hawks in Norway, less dovish pressure in the UK and Sweden, while the Euro area remains in a low rut.

September 14, 2021
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FLASH: Sweden inflation in August-21

SE CPI 2.05 % (vs 1.69 %)

SE CPIF 2.36 % (vs 1.87 %)


August 24, 2021
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Productivity trends damaged by breaks

  • Bullish forecasts rely on an absence of permanent damage from lockdown or change. Most damage tends to come through productivity, despite support from creative destruction, which anyway hasn’t happened yet.
  • Recessions require resources to reallocate and that process leaves some underutilised and misallocated. The cost consistently appears across countries and time as downwards breaks in the level of the productivity trend: the dynamics of metastable equilibrium.
  • We expect the recent economic experience around covid to require shifts in resources and another break in the productivity trend. That may vary with the length and extent of past restrictions. Recoveries remain likely to disappoint, in our view.