Blog - Page 2 of 12 - Capital Economics

The Chief Economist’s Note

Inflation’s revival more likely to be an American than a European story

Posted by Neil Shearing | Category : The Chief Economist's Note.

Concerns that one legacy of the pandemic will be a period of higher inflation are starting to spread. According to Eurostat, HICP inflation in the euro-zone jumped from -0.3% in December to +0.9% y/y in January. Core inflation increased from 0.2% y/y to 1.4% y/y – by far the largest monthly rise on record. In … Continue reading “Inflation’s revival more likely to be an American than a European story”

US stimulus debate highlights the global risks of diverging fiscal policy paths

Posted by Neil Shearing | Category : The Chief Economist's Note.

The past week has seen Joe Biden’s fiscal strategy come under fire from the most unlikely of places: it has caused a high-profile rift between Democrat-aligned US economists, setting the stage for a wider debate about the role of government in the post-pandemic recovery.   There are several strands to the argument, but the core of … Continue reading “US stimulus debate highlights the global risks of diverging fiscal policy paths”

Economic legacy of the pandemic will be different from previous crises

Posted by Neil Shearing | Category : The Chief Economist's Note.

Last week we launched a new service: ‘The Long Run’. This looks beyond our normal forecast horizon of one to two years ahead and analyses the issues that will shape economic prospects and financial market outcomes over the second half of this decade and beyond. You can find more details here. Most long-term forecasts rely … Continue reading “Economic legacy of the pandemic will be different from previous crises”

The pandemic is distorting everything – including the economic data

Posted by Neil Shearing | Category : The Chief Economist's Note.

The pandemic has already forced economic forecasters out of their comfort zone, but the terrain is now getting even more perilous. It is no longer sufficient to make an assumption about “the virus”. We now have to consider: vaccine rollout, vaccine efficacy, virus mutations, the lifting of lockdowns and the increasing likelihood that some restrictions … Continue reading “The pandemic is distorting everything – including the economic data”

An inflation revival won’t look like the 1970s

Posted by Neil Shearing | Category : The Chief Economist's Note.

Last week I argued that, although inflation in advanced economies is likely to rebound this year, this should not be mistaken for the start of a new post-pandemic era of higher inflation. However, this is clearly not the same as saying there will not be a period of higher inflation in some economies at some … Continue reading “An inflation revival won’t look like the 1970s”

Risks to economic recovery this year are all about pandemic fight

Posted by Neil Shearing | Category : The Chief Economist's Note.

In my final note of 2020, I made the case for expecting a strong rebound in most economies this year. That inevitably led to questions about what might derail our above-consensus forecasts – and those questions have come into sharper focus following the recent surge in virus cases in the UK, and the extension of … Continue reading “Risks to economic recovery this year are all about pandemic fight”

Fiscal planning requires clearer thinking

Posted by Neil Shearing | Category : The Chief Economist's Note.

The outlook for next year has brightened following the recent news on vaccines, and thoughts are starting to turn to the economic legacy of COVID-19. A key aspect of this relates to the fiscal consequences of the pandemic. This took centre stage last week in the UK as the announcement of the government’s spending review … Continue reading “Fiscal planning requires clearer thinking”