宏觀策略-全球經(jīng)濟(jì)：通貨膨脹的回歸

1、May 10, 2020 09:50 PM GMTGlobal EconomicsThe Return of InflationInflation will make a comeback in this cycle. Aggressive, coordinated expansion of monetary and fiscal policy will be reflationary. We see a high risk that policy- makers will prolong this response and also disrupt the structural disinf

2、lationary forces (tech, trade and titans) of the last 30 years. Inflationary pressures will emerge from 2022, preceded by concerns about the outlook.For important disclosures, refer to the Disclosure Section.ContributorsMORGAN STANLEY & CO. LLCChetan AhyaChief Economist and Global Head of Economics+

3、1 212 761-6730 HYPERLINK mailto:Chetan.Ahya Chetan.AhyaMORGAN STANLEY & CO. LLCDerrick Y KamEconomist+1 212 761-9260 HYPERLINK mailto:Derrick.Kam Derrick.KamMORGAN STANLEY & CO. INTERNATIONAL PLC+Nora WassermannEconomist+41 44 588-1050 HYPERLINK mailto:Nora.Wassermann Nora.WassermannMORGAN STANLEY &

4、 CO. LLCFrank ZhaoEconomist+1 212 761-1909 HYPERLINK mailto:Frank.Zhao Frank.ZhaoGlobal EconomicsITheReturnofInflationnflation will make a comeback in this cycle. Aggressive, coordinated expansion of monetary and fiscal policy will be reflationary. We see a high risk that policy-makers will prolong

5、this response and also disrupt the structural disinflationary forces (tech, trade and titans) of the last 30 years. Inflationary pressures will emerge from 2022, preceded by concerns about the outlook.PrefaceFor the past six years, I have written a good deal about how the 3Ds of debt, demographics a

6、nd disinflation are the key structural challenge for the global economy. Pick up a long shelf-life report from this period and you will probably find a comparison of the global macro backdrop to that of the US in the 1930s and Japan in the 1990s, and how macro policies post the global financial cris

7、is (GFC) were unlikely to effectively bring us out quickly from the debt and disinflation trend. Those who are still in the disinflation/deflation camp will argue that the Great Covid-19 Recession (GCR) is a supercharged version of the GFC and will only exacerbate the debt and disinflation trajector

8、y that we have been on.However, I now see the tide turning in favour of higher inflation, for two reasons:First, the GCR will be a sharper but shorter recession than the GFC. The trigger this time is an exogenous shock in the form of a public health crisis, rather than the classic, endogenous adjust

9、ment triggered by rising imbalances. The GCR also did not start out as a financial crisis, and the banking system is in better shape today than prior to the GFC. We expect global and DM output to reach pre-recession levels in four and eight quarters, respectively, compared with six and fourteen quar

10、ters during the GFC.Second, and more importantly, the public health crisis has galvanised policy-makers to respond swiftly. For the first time in a decade, we are finally getting coordinated monetary and fiscal easing a policy dynamic that we have viewed as essential to get out of the low-growth, lo

11、w-inflation loop. The scale of easing is also unprecedented during peace time. With the economic shock driving an even deeper wedge between low- and high-income workers, policy-makers are scrutinising what I have called trade, tech and titans more closely, given their role in driving the wage share

12、of GDP lower and widening the income divide. Disturbing this trio will also mean disrupting the key structural disinfla- tionary forces of the past 30 years.The GCR has unleashed forces that will make it a turning point and start a regime shift towards higher inflation. We see the threat that inflat

13、ion emerges from 2022 and will overshoot the central banks targets in this cycle.The consensus remains in the disinflation camp. Just as the consensus underestimated the disinflationary trends of the past 30 years, it is at risk of underappreciating the inflation threat. In response, I would argue t

14、hat the driving forces of inflation are already aligned and a regime shift is under way. The near-term disinflationary trend will quickly give way to reflation and then inflation.The inflation versus disinflation debate will continue, and we will return to it often in the months ahead.Chetan AhyaCon

15、tentsExecutive summaryThe return of inflation8Economic and political triggers for policy action were in place prior to the GCR13Policy actions pave the way for the return of inflation19How this cycle will differ from the last three? Price stability risks loomRisksChart scan: A Long-term perspective

16、on the US26 Chart scan: Fiscal and monetary policy stance across G4 economiesExecutive summaryAfter 30 years, inflation returns: The last three economic cycles diverged from earlier ones, as inflation failed to pick up despite strong growth in the 1990s and 2000s and what looked to be out- sized exp

17、ansionary monetary policy in the wake of the GFC. This cycle will be different as a tectonic shift in policy is preparing the ground for renewed inflation. Just as the disinflationary forces of the past 30 years were largely underestimated, we think that the consensus may now be overlooking the pote

18、ntial for renewed inflation.The triggers for policy action were already in place before the GCR: Indeed, prior to the GCR, falling natural interest rates (hence monetary stimulus on its own has been inadequate) and the absence of active fiscal policy had weakened inflation expectations despite the l

19、engthy expansion. The interplay of trade, tech and titans was already working in the background, dampening inflation dynamics but also contributing to the fall in wages share of GDP and the rise of income inequality. Discontent has risen, intensifying pressure on policy-makers to address these issue

20、s.The Great Covid-19 Recession (GCR) has unleashed forces that will alter inflation dynamics: In the near term, the GCR will be a disinflationary shock. But a sharper and shorter recession than the GFC implies quicker reflation. We expect global and DM output to reach pre-recession levels in four an

21、d eight quarters, respectively, as compared with six and fourteen quarters during the GFC.The GCR has also galvanised policy-makers in two ways:Fiscal policy activism is back, coordinated monetary and fiscal easing under way: Activist monetary policy has been with us for some time, but this cycle is

22、 marked by the return of active fiscal policy which was lacking during the post-GFC era and was what we viewed as essential in getting out of the low-growth, low-infla- tion loop. In this cycle, the combined G4 fiscal deficit will rise to 14.1% of GDP in 2020 from 2.9% in 2019, 1.6 times 2009 levels

23、, and will remain elevated at 10% of GDP in 2021, on our forecasts. The US fiscal deficit is projected to reach 19.2% of GDP this year (and will still be relatively high at 14% next year), and there are reports of a further US$1 trillion of fiscal easing, which would lift the 2020 deficit to 24% of

24、GDP, its highest level since 1942, when it stood at 27%. The G4 central banks will expand their balance sheets by a collective 30% of GDP in this cycle. The Feds balance sheet will expand by 38% of GDP by 2021, more than the 20% during QE1, 2 and 3 combined.Scrutiny of tech, trade and titans will in

25、tensify: Tech, trade and titans have been the key disinflationary forces over the past 30 years but have also contributed to a lower wage share in GDP and rising inequality. The discontent about inequality has risen, trig- gering policy action. Cracks are emerging in global supply chains and slowbal

26、isation trends are being accelerated by geopolitics. The emergence of trade tensions was partly motivated by rising inequality and has already led to scrutiny of the tech and telecom- munications sectors. Trade now faces even closer scrutiny after the outbreak of Covid-19, given the need for more re

27、silient local supply chains, especially in areas such as pharmaceuticals and medical equipment. Fears have risen that continuing technolog- ical change combined with workplace automation will widen the skill and income gap.The GCR has brought the issue of inequality into sharper focus: Recessions te

28、nd to hit the lower-income population the hardest, but the impact of Covid-19 on lower-income workers has been outsized. As a result, we believe that the underlying political pressures to address inequality will rise further, and see both fiscal activism and continued action to check tech, trade and

29、 titans continuing for longer. We see the US as being most exposed to the risk of higher inflation in this cycle, as the monetary and fiscal policies are the most expansionary and the issue of inequality is the most pronounced.Price stability will resurface as a threat to the cycle: The forces that

30、will bring about inflation are aligning. We see the threat of infla- tion emerging from 2022 and think that inflation will be higher and overshoot the central banks targets in this cycle. This poses a new risk to the business cycle, and future expansions could also be shorter. Central banks are now

31、more tolerant of inflation and will be keen to make up for some part of the lost inflation during downturns, in particular for the Fed, given its focus on the symmetry of the infla- tion goal.Risks are skewed towards an earlier emergence of inflation and potentially higher inflation: The speed and m

32、agnitude of infla- tionary forces will be determined by: i) The size, duration and spending mix of expansionary fiscal policy; ii) The extent to which tech, trade and titans are disrupted; iii) The pace of recovery and nor- malisation post-Covid-19; and iv) The reaction of central banks. We would vi

33、ew policies that boost spending on infrastructure, education and the public healthcare system as more beneficial to productivity growth and less distortive than transfers to households. Severe dis- ruption to tech, trade and titans could also create a regime shift in the outlook for corporate profit

34、ability.MORGAN STANLEY RESEARCH 5The return of inflationThe Great Covid-19 Recession (GCR) has unleashed forces that will alter inflation dynamics: We expect inflation to re-emerge inExhibit 1:Inflation to make a comeback in this cycleDMs, particularly the US, in a way that will be different from th

35、e pre- vious three cycles. It may seem odd to be talking about inflation, given that we are in the midst of the deepest global recession since the 1940s, which on net is a near-term disinflationary shock. But prior6%DM GDP Deflator (%Y)5%Structural forces of Tech,Trade and Titans broughtdisinflation

36、ary pressures.4%3%GFCGCRCoordinated monetary and fiscal easing + the disruption to forces of Tech, Trade and Titans will liftto the GCR, the economic trigger of low natural rates (hence mone-tary easing alone is not adequate to lift aggregate demand and infla- tion) and the political trigger of risi

37、ng inequality were already in place. This had led to some action on fiscal expansion and targeting the trio of tech, trade and titans. The GCR has accelerated these2%1%0%1990199520002005Debt, Demographics andDisinflation (3D) intensified.20102015inflation higher inthis cycle.policy responses, which

38、will pave the way for the return of inflation. We expect inflation to be structurally higher than in the previous three cycles and see the US as most exposed to this risk.More certainty on direction of travel than timingThe precise timetable for the return to inflation is difficult to predict as it

39、hinges on the evolution of the virus and the pace of the economic normalisation/recovery post-Covid-19. Private sector con- fidence (AKA animal spirits) has clearly been dented by the outbreak, but our base case is for a fairly quick recovery. The trigger for this recession is an exogenous shock in

40、the form of a public health crisis, rather than the classic, endogenous adjustment triggered by rising imbalances. Indeed, prior to the GFC, non-financial private sector debt/GDP had risen by 36pp in the US from 2000 to 2007. But prior to the GCR, private debt remained flat after a 23pp decline. We

41、see the shock as more akin to a natural disaster than a financial crisis, hence the GCR should not trigger the big balance sheet recessionSource: IMF, Haver Analytics, Morgan Stanley Research forecastsExhibit 2:Inflation did not emerge in the past three cycles, but this dynamic will shift in this cy

42、cle US Unemployment Gap (actual unemployment rate minus long-run normal level) - reverse scale Average Hourly Earnings (RS, 3mma, %Y)US Core PCE (RS, %Y)5%4.5%4%3.5%3%2%2.5%1%1.5%-1%-2%0.5%19841988199219962000200420082012201620204%3%US Core PCE2%1%Source: Haver Analytics, BLS, BEA, CBO, Morgan Stanl

43、ey Research; For US the wage measure is average hourly earnings for production & nonsupervisory employees before 2007.Exhibit 3:GCR to be sharper but shorter than GFCdynamics that we have seen over the past decade. This also did not101G10 Real GDP (pre-crisis level =100)4Q11start out as a financial

44、crisis, and the banking system is in better shape today than prior to the GFC. Financial sector debt/GDP has been declining persistently since its 2009 peak. Moreover, this recession has prompted the most coordinated and aggressive monetary and fiscal easing that we have witnessed in modern times. W

45、e expect global and DM output to reach pre-recession levels in four and eight quarters, respectively, as compared with six and fourteen quarters during the GFC.2Q08994Q19979593918987854Q212020 GCR (MS forecasts) 2008 GFCQtr 0 123456789 10 11 12 13 14Source: Haver Analytics, Morgan Stanley Research f

46、orecastsHowever, the direction of travel appears certain: We expect infla- tion to emerge from 2H22, but we caution that expectations may pre- cede the re-emergence. Our inflation framework rests on two pillars the new-found activism in monetary and fiscal policy and the collec-Exhibit 4:Non-financi

47、al private sector debt is stable, financial sector debt is lower coming into the GCRUS Debt to GDP (%) Private Debt (Nonfinancial175%Corporations+Households)125%Financial Sector (RS)tive action to address inequality, which will disrupt the disinfla- tionary forces of tech, trade and titans. Hence, t

48、he key question for us is when but not if we get inflation in this cycle.165%155%115%105%The road back to inflationWe see three phases in the journey a shift from disinflation in the near term to reflation and finally to inflation. The timing of this sequence depends on the pace of the economic reco

49、very post the Covid-19 shock.Phase 1: Disinflation during the Covid-19 shock145%135%20002001200220032004200520062007200820092010201120122013201420152016201720182019125%Source: BIS, Haver Analytics, Morgan Stanley ResearchPhase 3: Inflation re-emerges95%85%75%In the near term, the shock will likely b

50、e disinflationary, given the hit to household and corporate income. While both supply and demand shocks will be percolating through the economy early on, we see the demand shock lingering for longer than the supply shock, resulting in a net disinflationary impact. The widening output gaps and higher

51、 unemployment rates that we expect will also weigh on near-term inflation.Phase 2: Reflation on the path towards normalisationAs economies reopen, we expect supply disruptions to ease from mid-to-late 2Q20 onwards. However, the demand shock will still dominate for some time. A phased return to norma

52、l also means that social distancing measures are relaxed but not lifted immediately. A number of consumption venues such as retail malls, sports events and concerts, air travel and restaurants and bars will initially operate at limited capacity. As growth recovers, reflation will take hold, driven b

53、y the narrowing of the output gap and normalisation in the labour market. We expect DM output to reach pre-Covid-19 levels by 4Q21 while the labour market lags.However, after this normalisation takes place, we think that inflation dynamics will gain momentum. Assuming DM economies reach their pre-re

54、cession output levels by 4Q21, we expect this phase to kick in from 2H22, thanks to policy-makers renewed monetary and fiscal activism and coordinated easing. The emergence of protectionism before the GCR also results in part from the underlying tensions cre- ated by the declining share of wages in

55、GDP and income inequality. This rise in inequality has come into sharper focus as the shock has affected low-wage workers disproportionately. Hence, we expect more policy actions which will be targeted directly at some of the secular trends that have been related to the rise in inequality.Economic a

56、nd political triggers for policy action were in place prior to the GCREconomic trigger: The macro case for a coordinated fiscal and monetary policy responseThe 3D challenge intensified post-GFC, and a low-growth, low-inflation loop took hold: We have argued for some time that the developed economies

57、 were facing demand deficiency and consequently found themselves in a low-growth, low-inflation loop. Across DMs, weaker demo- graphic trends, high debt levels and disinflationary pressures (what we call the 3D challenge) have become more prominent. We have also been arguing that active fiscal polic

58、y has a constructive role to play in breaking out of this environment. But fiscal expansion was largely absent post the GFC and, at times, policy-makers even undertook fiscal tightening which was working to counter the effects of monetary easing.Exhibit 5:Debt levels are elevatedDM - Overall Debt to

59、 GDP300%290%280%270%260%250%240%Exhibit 6:Demographics are weakening across DMDM Working Age Population Growth (%Y)DM Age Dependency Ratio (RS)UN Projections1.5%75701.0%650.5%60550.0%50230%220%Dec-01Dec-04Dec-07Dec-10Dec-13Dec-16Dec-19Source: Haver Analytics, IMF, BIS, national sources, Morgan Stanl

60、ey Research-0.5%197019801990200020102020Source: Haver Analytics, UN, Morgan Stanley Research20302040452050Exhibit 7:Disinflationary pressures are prevalentExhibit 8:Estimates of natural rates are low14%2%0%8%6%1990s avg: 2.6%4%2000s avg: 1.8%2010-19 avg: 1.3%2%11DM GDP Deflator (%Y)3.53.02.52.0G4 Na