In our market system, too much revolves around short-term. This is certainly true for the debate on inflation. Last week’s data showed that US prices rose at the fastest rate in 13 years.This leads everyone from Top investor Restaurant and hotel owners, they now find that they may have to Pay more For service staff with low wages in the past, they are worried about overheating the economy.
but It’s too early to rack your brainsCompared with any long-term trend, these early signs of price increases reflect the predictable surge in animal spirits after the lockdown. Supply chain bottlenecks will soon be alleviated, just like personal protective equipment in 2020. As the consumer wave after the pandemic passes, car and holiday purchases will fade. Today’s well-paid attendants may be replaced by automated systems tomorrow: Just be aware of how many summer travelers have entered their pre-flight cocktail orders into the iPad.
We are not talking enough-and it will certainly prove more important and unpredictable how technology, changing demographics and their combined impact on real estate will affect the long-term trend of inflation. This is what really matters for workers, companies, and asset prices.
First consider the changes in the way and where Americans want to live and work.Some cheaper areas in the southern and western United States have emerged Influx of people They used to live in expensive coastal cities, but are no longer tied to offices. But this is still a fresh change. Most people who leave expensive New York or Bay Area apartments move to cheaper neighboring metropolitan areas, or nearby suburbs and rural areas— Do not go inside the United States.
Anyone is guessing how long these changes will last. If a bankrupt city cannot repair public services or education, some urbanites—especially those with children—may leave the city permanently. But others have moved back, and now they can go to the theater or favorite restaurant without wearing a mask.
Anyway, this”Migratory fanaticism“Causing house prices to rise 24% year-on-year. Before the pandemic, housing inflation, measured by rents and rent equivalents, accounted for The largest share of U.S. inflationAs Daniel Alpert of Westwood Capital pointed out: “Although house prices may fall if inflation continues and interest rates rise, eventually, starting in mid-2020, higher prices for houses will be This is reflected in rent and rent equivalents.” As he told me, this will “make up” for any drop in the prices of other goods and services.
The Fed tells us Don’t worry about inflation: After about six months, when the stimulus payment is withdrawn and the summer surge is over, things will calm down.But another surge may be beginning because Retired baby boomers Holding 35 trillion US dollars of assets and starting to give money to the children.
Some people believe that this will have a profound inflationary effect because it is money flowing out of the financial market and entering the real economy for expenditure-whether it is for households, cars, healthcare or education.Others believe that this wealth transfer will lead to inflation no problem: The longer the life expectancy of baby boomers, the more retirement savings, and most of the rest will go to the richest people Who can only consume so much.
What, if any, can Long-term containment of inflation? One way is if more workers produce more goods and services for people to consume. Without it, your demand is greater than the supply, so the inflation rate rises. These jobs must also be paid high enough to support consumption.
This leads us to one of the most difficult long-term trends: the future of work. The pandemic has accelerated the digitization of everything. I think this will form a major anti-inflationary force in the global economy.
Corporate investment in “intangible” commodities such as intellectual property and software increase rapidly During the epidemic.Executive officer Polls Consulting firm McKinsey found last year that three-quarters of respondents in North America and Europe expect to accelerate such investments in the next four years. This is higher than the 55% from 2014 to 2019.
These types of investments increase productivity, but at the expense of jobs, fewer jobs means less demand. Combined with digitization, this may reduce the prices of goods and services such as healthcare and education.In addition to housing, these services are usually Most inflation-generating categories OECD countries, including the United States.
Therefore, this technology-driven productivity will lead to deflation. If more workers can use these new technologies in their jobs, so too. Ideally, government investment in retraining will do just that. By transforming low-paying nursing jobs into higher-skilled middle-income jobs, even if prices in industries such as healthcare may fall, consumption may increase. As the baby boomers age, the demand for this has risen sharply, but the jobs currently offered are neither productive nor well paid.
This investment in “caring for the economy” is the focus of the stimulus plan proposed by the Joe Biden administration. Let us hope it passes. Otherwise, if nothing changes, we may see more digital companies employing only a few high-paying people-and the cost of consumption of goods and services that make up the life of the middle class will continue to rise.