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Global Macro Chart of the Month

May 2024
Stagflation Versus Soft Landing
Thoughts from our Multi-Asset team released monthly on the state of our evolving macroeconomic landscape.
U.S. Bloomberg Economic Data Surprise
Source: Neuberger Berman, Bloomberg, as of May 31, 2024
  • The trend towards growth data surprising to the downside and inflation surprising to the upside that commenced in February appears to have accelerated in May.
  • While it may be long forgotten, May saw weak ISM new orders, JOLTS (especially in the construction sector), consumer confidence, and construction spending, yet a strong Employment Cost Index (hailed by Mr. Summers as the best employment cost gauge) and underlying prices paid data.
  • Yet, at the index levels through the scope of the S&P 500 or MSCI ACWI, May was a very impressive month, with many global indices hitting new highs.
  • The market is still very much biased toward the view that as growth moderates, inflation will slow.
  • While this may be true, it is surprising the extent to which the market ignores the recent divergence in these two series and could very well be underestimating the probability of a move towards a more stagflationary second half of the year.
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