Results of the first month of 2018 turned out to be unhappy for the US economy. Inflation accelerated: in comparison with December, prices rose by 0.5% (0.4% was projected) - this is the maximum figure for the year. In annual terms, inflation added 2.1%, while analysts expected 1.9%. We note that the Fed's target for price growth is 2%.
At the same time, the industry suddenly stalled after several months of growth. Production volumes decreased by 0.1%, although an increase of 0.3%. Moreover, the indicator of the December growth was revised and lowered more than twice - from 0.9% to 0.4%.
The increased production of shale oil did not save the mining industry as a whole from falling - it sank immediately by 1%. And the manufacturing industry, which accounts for 75% of the total, stands on the spot for the second month in a row, which gives reason to seriously think about stagnation. The use of production capacities in January decreased to 77.5% compared with 77.7% a month earlier.
According to a number of analysts, it was the increase in inflation expectations in early February that became one of the key reasons for the recent collapse in the US stock market, which also attracted exchanges of many other countries.
Some experts believe that the US is on the verge of stagflation, that is, a state of the economy in which recession or stagnation is combined with rising prices. So thinks, in particular, the famous ex-head of the Federal Reserve Alan Greenspan.
Back in the middle of last year in an interview with Bloomberg, he said that since 2008, the States are in stagnation: this is indicated by a sharp decline in investment in the means of production and a slowdown in productivity growth. Now the transition to stagflation is starting, and such is the one that has not been observed since the 1970s. "This is not very good for asset prices," added Greenspan.
Other analysts believe that it is somewhat premature to frighten the US with stagflation: you can talk about this when there is an array of data for a fairly long period of time. "And we have two indicators for one period, on the basis of which to draw any conclusions, in my opinion, is not very correct," - said Deputy Director of the Analytical Department of Alpari Anna Kokoreva.
The slowdown in the growth rate of the US economy in the next three years is predicted by the authorities themselves, she recalls.. And the accelerated growth of inflation is simply an excuse for the Fed to raise the interest rate faster. "But it's too early to say that there is a critical moment in the US economy," the expert believes..
Leading analyst of the investment company AMarkets Artem Deev in general with his colleague agrees, but the fears of skeptics also consider not unfounded.
He notes that a faster increase in the interest rate amid a slowdown in industrial production is a double blow to the economy, and this in itself creates the conditions for the implementation of a negative scenario. Especially given that Washington is focusing on re-industrialization.
Such actions of the Federal Reserve System can also ricochet the impact on emerging economies, including the Russian. If the regulator tightens monetary policy faster than planned, it will lead to strengthening of the dollar and weakening of the ruble. For the Russian budget, in principle, it is not bad - revenues will increase. But for an average Russian this will mean an increase in inflationary pressures and a rise in prices in stores.
"The main risk is that the dollar can test the level of 1.26 against the euro and even go higher to the area of ??1.3, but at some point, with an active rate hike, if inflation will accelerate further, and the Fed takes a hawk position , global assets may be reset.
Funds, primarily American, seeing increasing risks, can begin to sell assets and withdraw their funds in dollars. If the classical reaction works, then there will be a very rapid growth of the US currency against both the euro and the ruble, naturally, and oil will be sold and in general all raw materials. And for the ruble, there is a risk of a rapid easing for several months against the background of sales of all assets and a sharp strengthening of the dollar, "explains Artem Deev.
However, this is a basic scenario, and not the fact that it will happen again now, the expert reassures. He recalls that the recent sales of the US market were accompanied by a very weak growth in the dollar index, that is, investors were not in a hurry to transfer funds to the US currency. Perhaps they were stopped by the hope of resumption of growth and the opportunity to again engage in buying up depreciated assets. But, perhaps, the matter is in distrust of the very dollar because of the record debt burden on the American economy.
"Debt that significantly exceeds 100% of GDP, a growing budget deficit and a negative balance due to current operations is a unique situation that is playing against the dollar," the expert says..
Inadequate economic performance and the very forecast of slowing GDP growth also does not contribute much to the growth of the US national currency. And America itself is not interested in a strong national currency today, so the Fed raises the interest rate very competently and carefully. And although many authoritative experts foreshadowed the collapse of the currencies of developing countries with tightening monetary policy in the US, until this happened, the dollar continues to weaken.
"The market expected a more rigid position.
It was expected that the balance will begin to decline, at least in the middle of last year. But they started talking about it only at the end of the year. In fact, in itself, an increase in the interest rate without a reduction in the balance meant that the Fed will continue injecting into the debt market, accordingly, banks without support will not remain. And this allowed the dollar to continue to weaken, "- suggests Anna Kokoreva.
But what if the accelerated price increase makes the Fed forget about caution?.