Asks if the shock has potential to become an economic issue.
Jonathan Ferro
Torsten Slok
This is a stagflationary impulse, similar to the trade war. Prices go up, and if it persists, GDP goes down. Creates a headache for the Fed assessing the dual mandate.
Asks if it's a bigger problem for the ECB or Bank of England.
Jonathan Ferro
Torsten Slok
Europe is harder hit because of greater energy dependency. The US produces more than it consumes.
Asks how important economic momentum is in withstanding/prolonging price hikes.
Lisa Abramowicz
Torsten Slok
The starting point is crucial. Inflation is already at 3% (core PCE). Adding more upward pressure is a serious risk the Fed must take seriously.
Asks if strong business investment could amplify stagflationary risk.
Lisa Abramowicz
Torsten Slok
The US economy is strong with tailwinds from AI, industrial renaissance, and fiscal policy. This combination risks more upside inflation pressure from an already bad starting point.
Asks about consumer spending given tax refunds and higher energy bills.
Jonathan Ferro
Torsten Slok
Tax refunds will be bigger this year, providing a $100bn+ lift to consumer spending. But if consumers are worried, they might save more. Watch consumer confidence.
Asks how central bankers will guide through this.
Jonathan Ferro
Torsten Slok
Easier for the Fed to be two-handed (inflation vs. labor market). More challenging for ECB/BoE as they only target inflation, so they should be more hawkish.
Asks if this torpedoes the bull case for Europe/ex-US.
Lisa Abramowicz
Torsten Slok
Challenge for Europe is its bull case relied on German fiscal spending. The policy reaction is critical—will they do more on defense/fiscal, or just accept higher inflation?