Interesting remarks by Lael Brainard (National Economic Advisor for the U.S. government) at the 40th Annual NABE Economic Policy Conference: “Today’s Strong Recovery Is Laying Solid Foundations for the Future”
Some highlights:
“The U.S. economy is healthier today than was forecast just one year ago, stronger than the same stage of previous recoveries, and better on growth and inflation than our peers.”
“There’s a small-business boom taking root across America.”
“Second, the strong labor market recovery has drawn more people into the labor force and led to a substantial reallocation of jobs and workers.”
“Productivity growth measured as output per worker has outpaced all other G7 economies in this cycle so far.”
While the United States has experienced a strong recovery from the pandemic, European economies are going through difficult times:
Isabel Schnabel (member of the Executive Board of the ECB) delivered an important speech analyzing the weak productivity performance in Europe:
Some highlights:
“At the turn of the millennium, Europe was operating at the global technological frontier, but today many euro area firms are laggards.”
“I will argue that our most potent weapon for enabling European firms to catch up to the technological frontier is to eliminate the remaining barriers to the free movement of goods, services and capital in the European Union.”
“Over the past three decades, a striking gap in the real IT-related capital stock has emerged between the euro area and the United States.”
“… the lack of external capital often makes it difficult for firms to scale up. In the euro area, venture capital investments are much lower than in the United States, so that many innovative companies hit funding constraints once they have entered the growth phase.”
“My diagnosis of the problem suggests that aggregate productivity growth depends both on how technologies are used and advanced at the firm level – the management hypothesis – and on how resources are allocated across firms – in other words the broad business environment.”
“I see three mutually reinforcing factors as critical for reducing resource misallocation and for promoting and easing the diffusion of digital technologies in the euro area.”
„First, we need a regulatory framework that more strongly embraces and encourages competition. …Second, we need to foster integration in the euro area. …Third, we need to raise public investment, both at national and European levels, in order to deal with pressing structural challenges: the green transition, territorial security, digitalisation and a growing shortage of skilled workers.“
Full speech:
https://www.ecb.europa.eu/press/key/date/2024/html/ecb.sp240216~df6f8d9c31.en.html
Informative slides:
“Monetary Policy Responses to the Post-Pandemic Inflation” (CEPR book, edited by Bill English Kristin Forbes Ángel Ubide. There are a number of very insightful chapters summarising the responses by fifteen central banks from advanced and emerging economies. There are also some cross-country thematic chapters:
https://cepr.org/publications/books-and-reports/monetary-policy-responses-post-pandemic-inflation
Implications of a U.S. CBDC for International Payments and the Role of the Dollar (by Jean Flemming and Ruth Judson from the Fed): “Our main conclusion is that although a CBDC is unlikely to harm the international role of the dollar or worsen cross-border payments, the improvements that could come from a CBDC could also be realized by improvements to non-CBDC payment systems that are already underway.”
“Global trade in the post-pandemic environment”: A useful overview by Maria Grazia Attinasi, Lukas Boeckelmann, Laura Hespert, Jan Linzenich and Baptiste Meunier of the ECB:
In the United States, the mood of celebration regarding inflation trends has somewhat faded. The decrease in inflation has stalled in January.
Inflation according to the Consumer Price Index of the Bureau of Labor Statistics: +0.3% compared to December (compared to January 2023 +3.1%)
Core inflation (excluding food and energy prices): +0.4% compared to December (+3.9% compared to January 2023):
https://www.bls.gov/news.release/cpi.nr0.htm
Producer prices also increased quite significantly by 0.3% in January:
https://www.bls.gov/news.release/ppi.nr0.htm
However, one should not read too much into the development in a single month. Anyway, it is the case that the US Federal Reserve pays more attention to the alternative Personal Consumption Expenditures price index (calculated by the Bureau of Economic Analysis BEA) for its monetary policy. This index usually indicates a lower inflation rate than the Consumer Price Index from the Bureau of Labor Statistics (among other things, there are differences in how rental prices and the imputed prices for owner-occupied housing are included). The figures for this BEA index for January have not yet been published.
The Swiss consumer sentiment index is now published at a monthly frequency. Great to see that MIME alumnus Marc Burri and Daniel Kaufmann (last November, he delivered an interesting presentation on Swiss inflation at our public lecture series) contributed to the new methodology for the Swiss State Secretariat for Economic Affairs.
By the way, Swiss consumer sentiment recovered in January. Good news for the Swiss economy (although consumer sentiment indices seem to be somewhat less reliable at the moment also for the United States or the euro area):
The Karl Brunner Distinguished Lecture of the National Bank is interesting every year. The National Bank announced that Kristin J. Forbes will deliver the Karl Brunner Distinguished Lecture in 2024. She is „a Professor of Management and Global Economics at the Sloan School of Management of the Massachusetts Institute of Technology. She is one of the leading researchers in international macroeconomics…“ and is also active in policy advising.
In previous years, a live stream was available for the Karl Brunner Lecture:
https://www.snb.ch/de/publications/communication/press-releases/2024/pre_20240216
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