Bernstein turns bullish on Inflation: 'The era of disinflation in the US may be ending'
Analysts at the investment bank Bernstein have revised their outlook on inflation, expressing a more optimistic view on the economic outlook.
According to a note published on Wednesday, Bernstein believes that the era of disinflation in the US may be ending, and the country is entering a new era of higher inflation.
“We believe that the era of disinflation in the US may be ending,” the note said. “The combination of a tight labor market, a tight housing market, and a strong economy suggests that inflation is likely to pick up in the second half of the year.”
“While the magnitude of the inflation pick-up is uncertain, we believe that the trend is clear: inflation is likely to be higher in the second half of the year than in the first half,” the note added.
Bernstein's view on inflation is a significant shift from the bank's previous outlook, which had been more cautious on the economic outlook.
“In our previous inflation forecast, we assumed that inflation would remain low and stable, but the data has been telling a different story,” the note said.
“The combination of a tight labor market, a tight housing market, and a strong economy suggests that inflation is likely to pick up in the second half of the year,” the note added.
The note cited several factors that are contributing to the expected increase in inflation, including the tight labor market and the strong economy.
“The tight labor market is a significant factor in the expected increase in inflation,” the note said.
“With the unemployment rate at a 50-year low, workers have more bargaining power, which is driving up wages and contributing to higher inflation,” the note added.
The note also cited the strong economy as a factor in the expected increase in inflation.
“The strong economy is another significant factor in the expected increase in inflation,” the note said.
“With consumer spending and business investment driving economic growth, the demand for goods and services is increasing, which is contributing to higher inflation,” the note added.
In conclusion, the note said that while the magnitude of the inflation pick-up is uncertain, the trend is clear: inflation is likely to be higher in the second half of the year than in the first half.
“While the magnitude of the inflation pick-up is uncertain, we believe that the trend is clear: inflation is likely to be higher in the second half of the year than in the first half,” the note said.
“We believe that the era of disinflation in the US may be ending.”
Author's summary:
Bernstein's revised outlook on inflation suggests that the era of disinflation in the US may be ending, and the country is entering a new era of higher inflation, driven by a tight labor market and a strong economy.