We offer a distinctive blend of quantitative, historical, and socio-political analysis to explain the global macroeconomy.

The Carl Lewis Effect

While inflation generally outpaces wages for the time being (meaning that real wages are negative), wage growth resembles the famously slow-starting sprinter who would nonetheless continue to gather pace after his rivals began to run out of steam. Likewise, we expect headline inflation to taper off in the course of 2023. Wage growth will continue to gather pace, with real wages turning positive in the middle quarters of the year.

Britain's New Austerity

Britain faces a wave of strikes that has been likened to the 1979 ‘Winter of Discontent.’ In response, the government has taken a hard-line stance, declaring that it cannot afford to meet workers’ demands, and that doing so will worsen inflation. We suggest that the government’s hard-line stance is likely misguided and based on overly-simplistic economic reasoning.

The New Global Inflation Regime

Central banks in advanced economies generally expect inflation to fall back down to about 2-3% in the next couple of years. However, we project that inflation will remain elevated much longer than expected, and may not settle below 3-4%. At the same time, employment will remain more robust than during similar phases of previous disinflation.