A stagflationary environment in the US and the Eurozone – Natixis Inflation Growth UnitedStates Eurozone Banks
The disappearance of productivity gains has led to a stagflationary equilibrium of high inflation and low growth, economists at Natixis report.“We believe that the United States and thewill be characterised by a stagflationary equilibrium due to the lack of productivity gains.”
“The lack of productivity gains generates a sharp rise in unit labour costs, a sharp rise in employment and therefore significant pressure on the labour market, and a slowdown in potential growth. This type of stagflationary equilibrium puts central banks in difficulty, due to the appearance of a conflict between the objective of reducing inflation and the objective of stimulating activity.
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